HOUSING markets throughout the developed world have started down the long road to recovery after years of recession. In most countries affordability has been growing, turning renters into would-be buyers. Interest rates have dropped dramatically in Britain, the United States, Australia and Canada, and house prices have come down from the inflated values that forced buyers, especially those entering the market for the first time, to postpone plans to move into their own homes. In the United States, where mortgage rates are averaging 6.7 per cent for a 30-year fixed-rate loan, the residential property market is booming. Michael Strauss, chief economist for Yamaichi International (America) said the property market was the strongest it had been for seven years. New housing starts in December hit 1.54 million, the highest level since early 1990 while sales of existing houses are at a record monthly high. ''Construction is exploding,'' Mr Strauss said. ''We are seeing a boom. ''Cheap mortgages and the growing families of the baby boomers have given the market a major plus.'' Only the West Coast of the US is showing signs of continuing sluggishness with southern California, a region closely linked to the recession-savaged aviation and aerospace industries, lagging the national average. Mortgage cuts also rekindled the residential property market in Canada late last year where the construction of new houses rose by 0.5 per cent in December, the fourth monthly gain in a row. According to the Canada Mortgage and Housing Corporation, construction work started on 172,100 new homes in Canada last year and this figure is expected to rise this year as economic conditions improve and interest rates stay low. Between October and November last year, housing starts rose in British Columbia, Alberta, Manitoba, Quebec, Nova Scotia and Newfoundland while a slight drop was recorded in Ontario. A market correction in the Vancouver residential market late last year ended a year-long price increase where average house prices had risen by more than 16 per cent to about C$290,000 (about HK$1.7 million). Meanwhile, buyers in the Toronto market are enjoying historically low house values and interest rates which have made buying a house in the Canadian capital more affordable now than at any other time in the past 13 years. In Britain, new figures that show a housing recovery is underway have signalled an end to the four-year-old slump in the nation's property market. National market reports released earlier this month show that house prices in Britain rose in 1993 as the property market followed other economic sectors down the road to recovery. ''Britain's housing market has reached the first turning point since the recession,'' said Union Bank of Switzerland's housing analyst Dr John Wrigglesworth. ''This is the first 'green shoot' of the recovery showing.'' Britain's largest home lending society, the Halifax Building Society announced last week that house prices had increased nationally by 1.2 per cent last year. Figures released on the same day by Nationwide Building Society claimed that house prices increased by three per cent over the year. ''What we are seeing is the effect of a unique combination of factors on the housing market,'' Dr Wrigglesworth said. ''Better job security, low interest rates and evidence that house prices have stopped falling have reversed the downturn.'' Fears that house prices would continue to fall, a potential decline that would impact especially hard on first-home buyers, hindered earlier recoveries in Britain. ''Negative equity, when owners face the prospect of owing more money on a mortgage than their home is worth, has been one of the social horror stories of the recession,'' Dr Wrigglesworth said. Negative equity levels, which hit GBP1.8 million (about HK$20.5 million) in the first quarter of 1993 had dropped to GBP1.2 million by the last quarter and analysts are confident the figure will continue to decline. Although the housing market is still fragile, analysts believe there will be only minor corrections as the market gains strength. ''As we come out of this recession, it will be normal to see some falls as well as gains but we expect the market to show an overall increase of five per cent by the end of 1994,'' said Halifax Building Society chief statistician Stephen Rothwell. ''The only obstacle to a stronger recovery are fears that unemployment levels will worsen and until this confidence level increases, we won't see people moving back into the housing market in numbers.'' A widespread recovery in the Australian residential property market has also been recorded as the nation's economy picks up. According to Westpac Banking Corp's chief economist Bill Evans, housing credit in November last year increased by 19 per cent over the 1992 figure while strong growth was also recorded in the number of new building approvals. Approval figures for the number of new homes in Australia increased by 2.5 per cent last year, while approvals for other dwellings, including residential units rose by 18.7 per cent. While first home buyers were playing an active role in the market, Mr Evans said the big increase in unit building approvals indicated strong growth in the residential investment sector. The property recovery in Australia has been fuelled by mortgage rates which have dropped to the same levels recorded in the early 1970s. Mr Evans said low interest rates would continue for 1994. ''There is no indication of any inflationary pressure in the economy that would bring about a rise in interest rates,'' he said. ''The Australian economy is now far more competitive than it used to be and people are not expecting inflation to rise.'' In terms of building approvals, the property recovery has been strongest in Western Australia and in Queensland. High yields and capital values in the Queensland capital, Brisbane, have driven up demand levels for housing, especially for inner-city accommodation. Beginning in April with the successful strata-title sale of 60 rooms at the Dockside Apartment Hotel for A$32.5 million (about HK$162.5 million), the sale of Brisbane's city apartments has attracted an unprecedented number of buyers.