In America, Britain, Spain New Zealand and Australia, average net rental yields have fallen to 3.5% or less, well below mortgage rates. Landlords are nowhere near covering their true costs, but many still hope to make their profit from capital gains says the Economist Magazine.

According to calculations by The Economist, house prices are at record levels in relation to rents (ie, yields are at record lows) in America, Britain, Australia, New Zealand, France, Spain, the Netherlands, Ireland and Belgium.

America's ratio of prices to rents is 32% above its average level during 1975-2000. By the same gauge, property is "overvalued" by 60% or more in Britain, Australia and Spain, and by 46% in France.

The Economist concluded that to bring the ratio of prices to rents back to equilibrium, either rents must rise sharply or prices must fall. Yet central banks cannot allow rents to surge as this would feed into inflation.

The dollar had its biggest weekly decline versus the euro in almost three months after a government report showed the U.S. trade deficit widened to $58.3 billion, the second biggest ever.

"It's a large deficit, and we all know how much this has been contributing to the dollar's decline,'' said Michael Woolfolk, senior currency strategist at the Bank of New York. "As long as we don't see a substantial improvement in the trade figures, the trend will remain negative for the dollar.''

Against the euro this week, the dollar slid 1.6% to $1.3457 in New York, according to electronic currency-dealing system EBS. It fell 0.8% to 104.00 yen, its fourth straight weekly decline versus Japan's currency. Woolfolk said the dollar may weaken to $1.35 per euro in the next week.

The U.S. currency also dropped versus the British pound, Canadian dollar and Swiss franc on concern foreign central banks may diversify their holdings of currency reserves away from dollars.

"This deficit is getting larger and is now spooking the market,'' said Shahab Jalinoos, a currency strategist at ABN Amro Holding NV in London. Jalinoos said the dollar may fall to $1.3666 in two weeks, matching its record low reached Dec. 30.

Surprisingly, the property sector in Botswana is proving rather robust, according to Williem Scholtz of Homenet Botswana Properties. It appears that the property market in Botswana has benefited from a liberal economic system and a sound economy and so the prospects for steady growth remain good.

"Numerous South African companies and multinationals are established in Botswana, creating additional demand for property, and there is a growing middle class of Botswana consumers," says Scholtz.

Property prices in Bulgarian increased further towards the end of 2004. A rise of 11% between last October and December was recorded by the Trimester official data.

Although property prices rose by 3.1% in capital Sofia, the highest growth (34.3 %) was recorded in Dobritch, a town in Bulgaria's far north-east.

The average price for square meter floorage in Sofia has reached almost BGN 1, 095 (EUR 547).

Tourism in Croatia Hotting Up.

According to Croatian authorities, tourism in the country is rapidly increasing. With an influx of new visitors, there appears to be further scope for property investment opportunities, consequently Croatia is shaping up as a front-runner in the eastern European battle to become the most popular country with the West.

Already Croatia's property market is attracting increased interest, particularly from the British and Irish investors. Martin Westby, author of How to Buy Property in Croatia, says: "Croatia has emerged as an attractive property investment market, both for capital growth and rental income properties. "The investment potential is best illustrated by the fact that prices in the area of Dubrovnik have increased 20% to 30% in the last 12 months."