Prices will fall 30% from their peak in 2007 and equity rich property investors are already circling like vultures looking for distressed land and property sales, according to the Knight Frank 2009 residential market forecast report.
Average prices are unlikely to return to the 2007 peak until 2015. London is likely to be the first in 2012 and Northern Ireland the last in 2019.
Sales volumes are expected to hit a low point later this year – achieving around 30% of long term average – and are predicted to recover to reach around 60% by the second half of 2009.
Development land values outside London are down 33% from their peak and are expected to fall another 15% in 2009. Agricultural has reached its peak and are now expected to fall by up to 10%.
'The central question for anyone who owns property is when will prices stop falling? Our forecast suggests that we will be closing in on the bottom of the market during late 2009/early 2010,' said Liam Bailey, head of residential research at Knight Frank.
'Prices in the UK peaked in late 2007 and have fallen sharply since that point. Our forecast suggests that we are now at least half way through the process of price falls with around 15% of an estimated 30% peak-to-trough decline already factored into prices,' he added.
The effects differ across markets, the report points out. The regional new build sector, for example, has seen more than a 50% decline in sales in some areas.
Recovery will be dependent on lending. Knight Frank analysts are assuming that mortgage providers will adopt a far more conservative approach to lending in the coming years.
The winners in the property markets in 2009 will be those who can buy in the next six months. 'Those requiring significant finance will be unlikely to be quick enough on their feet. Vulture funds and cash-rich individuals will be the first to benefit,' added Bailey.
'Opportunistic buyers are looking for distressed property sellers. They are particularly interested in repossessions and also development land or even newly completed developments. In fact, anything where values are felt to have fallen as far as they are likely to.'
