Maya Fischer French

An increasing number of would-be homeowners are finding their mortgage applications declined. Discounts on the prime lending rate are narrowing as banks start to feel the credit squeeze and fears are mounting as bad debts increase and property prices start to slide.

There is no doubt house prices are starting to weaken. This week Standard Bank’s Property Gauge showed an 8,6% fall in property prices for April. Houses are increasingly being sold at below their initial asking price and are staying on the market for longer, says the bank’s report.

Inflation has moved well out of its target of 3% to 6% and looks set to stay that way for at least the next 18 months. At the same time volatility in the stock market has increased. During this difficult period, will absolute fund managers be able to meet their inflation-linked targets?