The Economist magazine published a special report in this months issue entitled "House Prices ? After The Fall". Some might call it pessimistic, alarmist, nonsense or worse but only the foolish would choose to ignore the research that comes out of a think-tank with the kind of resources that this highly respected publication has. Though as a caveat I might add that I am living in Ireland, the country that a recent Economist study declared the best place in the world to live and I could find several dozen reasons to dispute this ? but that's another story!

What the Economist tells us is nothing that we don't already know. An obsessive interest in property by investors, prompted by low interest rates and a loss of faith in equities, has fuelled a massive 'bubble' in the property market, the largest house price boom ever witnessed. Perhaps what we didn't know is this bubble exceeds by 20%, the global stock market bubble of the 1990's and we all know what happened there! It burst, as all bubbles do when under excess pressure.

So what are the predictions for the future and what implications might they have for those considering an investment in property now? Using information gathered from lending institutions, estate agents and national statistics, the Economist has compiled a set of global house prices indices covering 20 countries from 2002 to date. The figures indicate that house prices are seriously over valued in many countries including Spain, Ireland and France, fuelled mainly by speculative demand. America, though heating up a little later is following the same path. Using the current slow down in Australia as an example, and Japan and Germany's negative house price growth, predictions are that with even a flattening off of the market rather than a total collapse, recession is inevitable since people will be far less inclined or unable to release capital on their homes for spending in the economy. So even a 'soft-landing' will cause significant economic pain! In addition, massively inflated prices that are disproportionate to income spells bad news, especially for landlords. In Ireland, for example, rental yields have fallen to below 3%, well below current mortgage rates.

Significantly, all the countries in the Economist's house price index are well developed established economies. The report gives no mention to the emerging economies in Central and Eastern Europe. If, as indicated the housing market in Britain, Ireland and the Netherlands is starting to cool, this will have an immediate impact on the property market in these economies as investors chase better returns. Already ?1 billion of Ireland's anticipated ?6 billion of real estate investment funds are expected to flow to countries outside the EU-15.

It seems the only option now left for the canny property investor is to play the cat and mouse game, chasing newer markets that are experiencing similar conditions for growth and expansion that led the older 'burnt out' markets to their success. But with this comes the element of risk. Economies are delicate, unpredictable systems that don't always fulfil the expectations of players within them.

For those who prefer to shy away from the risks of property investment, preferring to sit it out while the bubble follows its course, there is another option. Chateaux Lafite 2003 will yield creative investors a 13% tax-free rise over 11 months and if the market crashes, you can always drink it!

Tracey Meagher is a property advisor and freelance journalist. She maintains and edits the Property Newsdesk and also gives email consultation to those considering buying property abraod.