The worst case scenario is that it could be even worse than the last major downturn in the 1990s as prices have fallen further but it will not be as bad as in the US or Spain.
'If you look at the UK market as a whole you are seeing prices fall, with the exception of Scotland for various reasons. And I think the reality is that we should expect prices to fall further over the next year to 18 months,' said Liam Bailey, Head of Research at Knight Frank.
He said prices have fallen much quicker than they did in the 1990s. 'The assumption for most people is, if prices fall it's not ideal, but actually the best and most important thing is we get churn in the market, that deals are done, and this time round it seems to be much quicker and much harder than it was in the 90s,' he explained.
His analysis is that the earliest signs of recover are unlikely for two years. 'There are two key questions. One is when do prices stop falling and then begin to rise, and probably that's 2010.
'Then when do volumes of deals begin to improve and that could be next year. It's unlikely that we'll see levels of deals in the market so low for so long. Deals are down 50% year-on-year at the moment, that's much further than they fell in the early 90s when they only declined by about 30%. So it's quite a significant difference this time round,' he said.
The good news is that the UK is unlikely to be hit as hard as the US and Spanish property markets. 'Fundamentally we haven't overbuilt in the UK. There are lots of reasons to be relatively positive about the housing market. We didn't overbuild like the Irish or the Spanish or the Americans. Land supply is very tight,' he said.
'Over the next two years we'll probably build half as many houses as we have traditionally. So demand is strong, supply is weak, the reality is pricing got out of control and it will need to readjust and once that process has ended the market will begin to move again. It's just a question of when pricing just bottoms out, basically,' he added.