According to Knight Frank’s latest Global House Price Index, there are the first tentative signs of recovery in 33 key locations across the globe.

Liam Bailey, head of residential research at Knight Frank, said: “It now appears that house prices are starting to stabilise across the world. The latest results from our Global House Price Index show values increased in almost half of the locations reporting price changes for the second quarter of the year.

“Significantly, quarterly price falls accelerated in only 22% of the locations and did not exceed by 10% in any country. This compares with double-digit falls in a number of locations during the first quarter.”

Israel was the top performer on an annual basis with prices rising +12.5% while Dubai was worst with prices falling -47%, but slowing in the second quarter of the year to a more manageable -7.5%. A number of other countries also saw strong quarterly gains with prices in Norway increasing by +5.3%, Sweden up +3.6% and Finland up +3.9%. According to Bailey, Northern Scandinavia is also recovering well.

He said: “This is probably because prices didn’t increase to the same extent as other areas during the property boom. There has also been a sharp slow down in the number of houses under construction. In Sweden, construction started on 45% fewer houses in the first half of 2009 compared with the same period last year. In Norway, new starts have fallen to their lowest levels since 2000.”

Even the US, where the sub-prime mortgage crisis started, is starting to see a recovery as prices increased by +1.3% in the second quarter following falls of -7% in each of the previous two quarters, the report also showed. Even in Dubai the recovery looks underway.

Bailey said: “Prices are still falling in Dubai, but the decline has slowed sharply.

The second-quarter drop in Dubai was only -7.5% compared with a massive -41% slide during the previous three months. While the market still remains over supplied, transaction volumes have started to increase on the back of reduced asking prices, the increased availability of credit and more certainty from developers regarding the completion dates of projects.”

The report concludes that overall, it seems that prices are starting to bottom out around the world.