Growth in the global residential property market continued to slow during the second quarter of 2008, according to the latest statistics from Knight Frank.

The estate agent finds growth fell to 4.8 per cent during the period, down from 6.1 per cent in the first quarter of the year.

Prices are now falling in almost half the markets listed in the index.

However, highlighting a disparity in global property cycles, Bulgaria, Slovakia, Russia, the Czech Republic, Hong Kong, Singapore, Cyprus and Colombia are all still recording growth in double figures.

In brief it appears the economies of central and south-eastern Europe appear to be the strongest performers, while northern Europe (including the Baltic States), together with the United States, are suffering the most.

"The index shows global house price inflation is continuing to fall back, with much of continental Europe now seeing low or negative growth," explained Nick Barnes, head of international research, Knight Frank.

"Nevertheless, performance is very varied, with prices still rising rapidly in several locations in Asia and Eastern Europe."

Bulgaria, where values have grown at 32.3 per cent over the past year, has once again led the way, recording growth of 68 per cent over the past two years.

Growth in the country has been from a low base when compared to western Europe, but demand from international investors and domestic economic growth remain strong, although there are fears of oversupply.

Strong performance in Slovakia and the Czech Republic is also driven by robust economic growth, reports Knight Frank.

In contrast rapidly depreciating housing markets of the Baltic States – led by Latvia, where prices fell by 24.1 per cent over the past year, demonstrate that rising inflation and mortgage costs are real risks for the emerging economies of Europe.

This is particularly the case for those that have seen high levels of investment activity over recent years – during a global property boom.

Housing markets in countries such as Spain, Denmark, the UK and Ireland are all being severely challenged by the global credit squeeze – with the IMF arguing property is overpriced by as much as 30 per cent in these countries.

These European nations have now been joined by New Zealand on the list of nations where property prices are falling sharply.