Global house prices recorded a two-year low towards the end of 2014, according to new data from Knight Frank.

The property consultancy's Global House Price Index dipped 0.6 per cent in the final quarter of 2014 – its weakest performance since the third quarter of 2012. Europe, with its tense geopolitical climate, drove the downswing and became the year's worst performing region with prices rising on average by just 1.6 per cent.

The picture for this year is expected to largely be painted by the effects of the European Central Bank's quantitative easing and the US Federal Reserve’s anticipated rate hike.

“In 2015, the focus is not just on the extent to which the US market is able to absorb an interest rate rise but the impact on those markets whose currencies are pegged to the dollar,” said Kate Everett-Allen from Knight Frank's international residential research.

On a country-level last year, Ukraine was the only one to record a double-digit price fall as tensions with Russia escalated.

Ireland led house price growth worldwide, climbing 16.3 per cent over 2014. Hong Kong followed close behind as affordability constraints saw its mainstream property market overtake the luxury segment.

Knight Frank's Global House Price Index, weighted according to each country's GDP, is compiled using official government statistics or central bank data.