This year has been one that most home-owners would rather forget. Price falls, currently wiping about £80 off the average property each day, show no sign of abating and will continue well into next year. So say the forecasters, many of whom were caught out by the steeper than anticipated declines and are now adopting a more bearish tone. Prices have fallen by between 10.1 per cent and 16.1 per cent in the past 12 months, depending on which of the main indices you use. In 2009 some light is expected to emerge at the end of the tunnel, but when and where is anyone's guess.

The predictions so far generally agree that the beginnings of a real recovery are most likely in 2010, but there is some disagreement on how quickly prices will return to the peak levels of 2007. Capital Economics, renowned for a more gloomy outlook than other economists, predicts that prices will fall in total by 35 per cent, but that signs of a recovery will have begun to emerge in 2010. The Centre for Economics and Business Research (CEBR), the traditionally bullish research group, says that average house prices will continue to fall for another 12 months and will reach a low of £149,000 by next autumn. However, a full recovery will take another four years, it says, with prices not returning to 2007 levels until 2013.

Savills, the estate agency, expects house prices to fall by 25 per cent in total in 2008 and 2009, before a recovery “gains momentum” in 2011, with London and the South East leading the way. However, it does not expect a full return to 2007 peak prices across every part of the country until 2018, with Northern Ireland last to recover. Meanwhile, Knight Frank thinks that Britain is at least half way through an estimated 30 per cent peak-to-trough decline and that prices will bottom out in early 2010. It also thinks that prices in Northern Ireland will lag behind, not returning to the peak until 2019.

This week the Royal Institution of Chartered Surveyors (RICS) reported a rise in buyer interest, indicating that there is demand in the market for property if the price is right. Hometrack, the property data group, has found that the number of house sales agreed rose 5.3 per cent in October, suggesting that sellers are becoming more realistic about prices.

Howard Wheeldon, senior strategist at BCG Partners, the brokerage, says: “It would not surprise me in the least to see housing market activity show some small signs of rising in the second quarter of 2009. That isn't to say that house prices will stop declining but that some of the more violent forecasts could just be wide of the mark.”

SOURCE: The Times