New Zealand tops global list for house price rises

New Zealand comes first in the global ranking once inflation is considered

New Zealand, Turkey and Canada have seen the biggest leap in house prices over the past year, according to a new global ranking.

Estate agents Knight Frank found property markets in the three countries grew between 10% and nearly 14%.

While New Zealand comes in second after Turkey, it tops the list once the impact of inflation is stripped out.

The average house price in Auckland hit NZ$1m (£554,000, $743,000) for the first time last month.

Separate data shows house prices in the Auckland region rose 15.9% on last year, making them more than 85% higher than the previous market peak in 2007.

The rise in New Zealand house prices has been fuelled by strong immigration, low interest rates and limited housing.

The Reserve Bank of New Zealand has consistently warned that the soaring prices are a risk to financial stability.

Cooling the market

On 1 October, new rules will come into effect to cool off the market by raising the down payment that residential property investors need to get a mortgage.

New Zealand's property market is among some of the Asia Pacific region's star performers, which also include Australian cities such as Melbourne and Sydney.

Price rises in these cities have been driven not just by domestic demand but overseas interest from Asia, especially China.

"What's interesting is that we've seen governments and central banks in these western countries adopt some of the measures introduced in Asia to take the heat out of their property markets," Nicholas Holt, Asia Pacific Head of Research at Knight Frank told the BBC.

"This is to address domestic concerns such as affordability, reduce speculation and prevent borrowers and banks from over extending themselves," he explained.

In comparison, Taiwan is at the bottom of Knight Frank's ranking, with price falls of 9.4% over the past year.

Hong Kong and Singapore have also seen significant reductions in house prices, according to Knight Frank.