AUSTRALIAN house prices rose the seventh fastest in a worldwide study of property prices.

Only Bulgaria, Singapore, Hong Kong, Jersey, Russia and Iceland beat Australia in the study of 34 countries.

The Knight Frank Global House Price Index found that while property price growth in the world's prime markets was slowing, growth and demand in Australia was above average.

Australian property prices rose by an average of 13.8 per cent in the 12 months to March, compared with a worldwide average 6.1 per cent.

Australia has jumped from 12th spot this time last year.

Research found Australian housing had risen by more than that in China, Sweden, South Africa, Croatia, Canada, Indonesia, The Netherlands, Norway, Spain, Portugal, Finland, Poland, France, New Zealand, Hungary, Austria, Britain, Lithuania , Switzerland, US, Israel, Denmark, Japan, Germany, Ireland, Estonia and Latvia.

House prices rose an annualised 31.5 per cent in chart-topper Bulgaria while prices in last year's leader -- Latvia -- were in freefall, having dropped 20 per cent compared to a 60 per cent rise last year.

Knight Frank head of residential property James Hall said the global house price index showed the US sub-prime crisis had affected property prices worldwide.

"While this fallout is likely to continue to affect global property prices, prestige markets remain resilient in terms of global growth," Mr Hall said.

Knight Frank national research director Matt Whitby said while Australia's spate of consecutive interest rate rises since May 2002 had pushed rates to a 12-year high, there was still strong residential property demand.

"The upward pressure on house prices has been caused by rising construction costs, inflated by competing demand for labour and raw materials from the mineral sector," Mr Whitby said.

He said emerging locations were expected to be this year's hot spots.

Heading the list were Croatia, Greece, Brazil and Morocco.

Article from: www.news.com.au