The downturn in the property market is likely to accelerate in 2009 and overall the UK sector is in a worse state that the US where problems are concentrated in certain areas, says the report written by Professor Michael Ball of the University of Reading's Department of Real Estate and Planning.
The report calls for further cuts in interest rates, strong measures to increase the volume of lending, temporary government guarantees for mortgages for first time buyers and others and more extensive, temporary action on stamp duty.
The report, commissioned by the National Association of Property Professionals, for the National Association of Estate Agents, points out that the crisis affecting the housing market is without precedent and there is no knowing how far the market will fall unless something is done about it quickly.
It argues that the scale of the reduction in mortgage credit is so great that few can buy but that more sellers will be forced into the market. They will increasingly need to cut prices, but many will not find buyers because too few in the market to buy will be able to get mortgage finance.
The report also underlines the value of the housing market to the whole economy, estimating it is worth 60% of overall asset wealth. It also argues that home ownership may have grown as much as it can, and that modern private renting will become an increasingly important part of the UK housing market.
'Investment landlords, the overall shortage of housing supply and the numbers now believed to be renting but waiting to buy, all suggest that recovery would be fast if it were allowed to happen. However, prospects for the housing market look grim. The Government and the Bank of England need to take the situation extremely seriously,' said Peter Bolton King, chief executive of NFOPP.
