Barnes said: “The rapidly depreciating housing markets of the Baltic states — led by Latvia, where prices fell 24.1% over the year to July — show that rising inflation and mortgages are risks for the emerging economies of Europe.”

These are not the only issues, of course. The unpredictability of the political regime in Russia also concerns many British investors. Stuart Webster, who runs New Star’s international commercial property fund, said: “We do not invest in Russia because the political risk is just too high.”

He is keener on more developed European countries, such as France. Webster added: “The vacancy rate in central Paris is very low at 2%, compared with 6% in London, and it is unlikely to change because of French planning laws.

“We also like it because commercial rents are pegged to the construction index, which has risen recently. What’s more, we are getting some great deals because nobody else is buying at the moment.”

Latin America

Colombia is being tipped as the next big story in Latin America by some experienced property investors, but its reputation for corruption will scare away all but the bravest.

A somewhat less risky proposition is to invest in the Brazilian market. Brazil has a population of 192m, the huge majority of whom are too poor to have a mortgage. Property there is also cheaper than in most of the other emerging economies.

Japan

Property prices in Japan crashed spectacularly in the 1990s and are still to recover completely due to the country’s continuing economic problems. It is this that is attracting attention, however, as there is finally light on the horizon.

Webster said: “Japan’s economy — the second largest in the world — is finally seeing signs of sustainable recovery. However, the property market is lagging the rest of the world due to the 10 to 12 years of stagnation which it is only now leaving behind.”

He and Murphy like Japan because of the low cost of borrowing money there. Murphy said: “Japanese rental properties can offer very attractive yields for UK investors. This is largely because you can borrow money there at rates from as little as 1%, while making up to 8% in the residential market, for example.”

Rest of the world

The Knight Frank figures show that Australia experienced a downturn in house-price growth during the second quarter of this year, with values dropping by 0.8%. Annual growth dropped to 9%, down from 13.8% during the first quarter, as a result.

“We believe that Australia is beginning to look good value and expect to invest within six months or so,” Ridgewell said.

Abu Dhabi is another place where there is a lot of development going on at the moment. However, Webster is concerned that there will not be enough demand for all the property being built.

How to invest

Funds offering exposure to international property markets include New Star International Property. It has done well in the past year, losing just 5.8% — compared with a decline of 37% for the FTSE 100 and 28.5% for the Investment Management Association specialist sector — according to figures from Trustnet. The fund yields 4%.

For investors interested in Asia, the new Norwich Union fund — the first daily dealt Asia-Pacific property fund for UK retail investors — also offers a way in. Launched last month, the fund is initially targeting markets in Japan, Singapore, Hong Kong, South Korea and Malaysia. As the Asia-Pacific Property Fund expands, it will seek investment opportunities in less mature, more rapidly growing Asian markets such as India and China. The minimum investment is £1,000.

Investment trusts offer another way in. The Axa Property Trust, for example, has increased its net assets by 13.8% over the past year, but is trading on a huge 61% discount to net asset value.

Kenmore European Industrial is up 13.7% but has an even wider discount — 78.7%.

Hugo Shaw at the adviser Bestinvest sounded a word of warning: “Direct investment in overseas property brings many risks.

“Most people also already have a huge financial commitment to residential property by virtue of their main residence in Britain, meaning they are probably overweight in residential property in the first place.”