Real estate markets worldwide are stabilizing and showing signs of a tentative recovery, according to a newly released report from London-based global property consultancy Knight Frank.

The quarterly Knight Frank Global House Price Index shows property values increasing in almost half of 32 countries surveyed during the second quarter of this year. "Significantly, quarterly price falls accelerated in only 22% of the locations and did not exceed 10% in any country," says Liam Bailey, head of residential research for Knight Frank. "This compares with double-digit falls in a number of locations during the first quarter."

Some of the strongest signs of recovery are coming from the Nordic countries, with prices up over the previous quarter by 5.3% in Norway, 3.9% in Finland, and 3.6% in Sweden. But countries as diverse as Australia, Israel, and the Netherlands also are posting solid gains.

In some places, demand is being spurred by historically low borrowing costs and home buyer tax incentives. Sweden's central bank, for example, has slashed the prime interest rate from 3.75% a year ago to only 0.25% today, so banks there are now offering home loans at interest rates as low as 1.5%.

Interest rate reductions by the Bank of England, coupled with a relatively tight supply of housing in Britain, has reignited the market there as well, sending prices up 1.1% in the second quarter after five consecutive quarters of price drops.

Housing Market Is Still Fragile

The market is even starting to rebound in the U.S., where the subprime mortgage crisis originally began. U.S. home prices rose 1.3% in the second quarter, following declines of 7% in each of the previous two quarters. Even hard-hit regions such as California are starting to recover.

But worries still linger. Credit remains constrained as the global economy struggles to recover, and many countries still have an excess supply of unsold property, putting downward pressure on prices. Despite the positive signs in the second quarter, prices in most countries remain lower than a year ago, and Knight Frank says the market is still fragile.

What's more, super-low interest rates won't last forever. "One could even say that house prices are now artificially boosted by low mortgage rates," says Magnus Lange, a partner in the Stockholm office of real estate brokerage Cushman & Wakefield. "I'm expecting to see (Swedish) house prices fall by 15% in the year ahead, once banks raise their interest rates."

And some countries are still basket cases. Bulgaria, where the real estate market once boomed on sales of vacation homes to wealthy Russians and Europeans, saw second-quarter prices fall 9.7%, on top of a 12.4% decline during the first quarter.

For a look at how all 32 countries surveyed by Knight Frank fared in the second quarter, check out our slide show.