Dubai, once home to the world's biggest construction boom, is now the scene of the world's biggest property slump, according to figures published today by estate agent Knight Frank.

House prices in the desert sheikhdom dropped by an extraordinary 40% in the first three months of 2009, outpacing falls anywhere else in the world after an investment bubble burst.

Singapore, the nation worst hit by the collapse in world trade, saw the second biggest fall, with property prices down 16.2% in the quarter. Bucking the trend were Finland, where house prices rose 4% over the three months, and Jersey, where prices surged by 5.6%. The fall in sterling has prompted foreign buyers to snap up property in the channel island tax haven, making homes even more out of the reach of local buyers.

A 16.5% price fall in the UK over 12 months placed it among the five countries with the biggest annual decline, but its quarterly decline, at 4.5%, was exceeded by many other countries.

The global turnaround in house prices has been remarkable. A year ago, homes in Dubai were spiralling upwards on an annual growth rate of 48%. The boom spawned developments such as the Palm Jumeirah and Burj Dubai, the world's tallest tower, but now apartment blocks stand empty or half-finished. Dubai's ruling family, the Maktoums, have already sought a £13.5bn emergency loan from their oil-rich neighbour Abu Dhabi, and fears are growing that many of the region's biggest properties companies are close to bankruptcy.

Dubai "is in a mess," said Nick Barnes, head of international residential research at Knight Frank.

He added: "The inescapable trend is that the worst and most widespread economic recession since the 1930s continues to batter housing markets across the globe. Rising unemployment and concern among those still in jobs, added to constrained credit conditions, means that buyer demand for housing remains suppressed and confidence is low in most markets, which is inevitably having a negative impact on house prices."

Barnes is cautious about calling the bottom of the cycle for global house prices, with only anecdotal evidence of "green shoots".

"There is sporadic evidence of buyers snapping up relative bargains, however of those buyers in a position to move, many are still waiting for clearer signs that markets are approaching the bottom of the cycle," he said.

"Moreover, in a falling market, sellers are usually forced to a greater or lesser extent which means that opportunities to buy are greatly reduced and transaction volumes correspondingly low."

The countries which did not experience the long boom in prices seen in the Anglo-Saxon world are now apparently avoiding the bust. Switzerland, where house prices rose by an average of just 1.5% a year over the past two decades, saw a 2.1% quarter-on-quarter gain and 5.6% over the year.

In Germany, prices fell by just 1.5% over the year. But Knight Frank admits that it has never been more difficult to access data about house prices, with extraordinary conditions in many markets delaying the publication of statistics. Prices in Latvia fell 36% over the year and in Poland by 13%, but neither country has yet provided figures for the first quarter of 2009.

Biggest price falls, Q1 2009

Dubai down 40.0%

Singapore down 16.2%

Estonia down 9.9%

Norway down 6.2%

Denmark down 6.1%

Biggest price rises, Q1 2009

Jersey up 5.6%

Finland up 4%

Thailand up 2.7%

Israel up 2.6%

Switzerland up 2.1%