June 2 (Bloomberg) -- Latvian property prices plunged the most in the world in the first quarter as the economy fell into the steepest recession in the European Union, a survey by Global Property Guide showed.

Average apartment prices in the Latvian capital, Riga, plummeted an annual 50 percent in the first quarter, the survey showed. The second-worst performing property market was Dubai in the United Arab Emirates, where house prices fell an annual 35 percent in the quarter.

“Latvia is in surprisingly deep trouble,” yesterday’s Global Property Guide report said. “Average apartment prices in Riga declined an astonishing 50 percent over a year earlier to 747 euros ($1,058) per square meter, with a 30 percent drop during the quarter.”

Latvia’s economy shrank 18 percent last quarter and the country is relying on a bailout from the International Monetary Fund and the European Commission to avert a default. The government is struggling to push through budget cuts to rein in the deficit so it can continue to receive its international loan as the recession deepens.

The government has committed itself to wage and spending cuts to bolster competitiveness and rebalance the economy while keeping its peg to the euro.

The Global Property Guide survey ranked Singapore as the third worst-performing property market, recording an annual decline of 23 percent in the first three months. Iceland came fourth with a 20 percent year-on-year drop.

For Related News and Information: Latvian Economy TNI LATVIA ECO BN <GO> Latvia’s financial crisis TNI LATVIA CRUNCH <BN> Economic Statistics: ECST <GO>

Last Updated: June 2, 2009 01:29 EDT