HOW LONG WILL THE HANGOVER LAST

Following a quarter of a century of the fastest economic growth mankind has ever experienced, we're now apparently enduring the resulting hangover. Easy credit around the globe resulted in debt leveraging, and pushed house prices by almost obscene percentages.

We're now faced with some house price contraction as world credit tightens up once again.

South African house prices have been resilient compared with most foreign markets, which seem to have corrected by as much as 20%. The experts suggest that our house prices are being held up, (even in current market conditions) by demand, as thousands of new buyers come into the market following the economic growth of years past. As in China and India, more people are entering the property market as their standard of living improves.

Also, our banks have not been caught up in the global credit crises. Whilst they may be a bit more paranoid, with credit managers throttling down the industry, the banking institutions in this country are still strong. In fact, some will still loan 100% of the value of the property to 'A-grade' buyers.

But we also know that house prices tend to move in tandem with interest rates, so the head will throb till interest rates move down noticibly.

So what are the current pointers?

The world central banks have started cutting interest rates aggressively, in an attempt to inject confidence back into the markets. The Rand has been hit hard in the last few weeks, which will not help our cause, but oil prices have also tumbled , which should help balance the effects of a soft rand on inflation.

Experts still predict a fall-off in interest rates, and the markets are still discounting up to 3% rate declines through 2010.

New developments in the lower segment of the market, especially those with transfer late in 2009 or early 2010, in secure complexes and near places of work, are still safe buy-to-let choices for the prudent residential investor.