Savills has issued its first Residential Property Focus of the year, which looks beyond the current oppressive gloom hanging over the residential property markets.

Its latest report highlights the potential for equity rich buyers to take advantage of falling prices to regenerate the market in the coming months.

Jamie Macnab, a Director of Savills Scotland said: "Last year's price falls has meant that affordability within the Scottish housing market is rapidly being restored.

"There are even whispers that the point at which residential property appears good value is in sight. Further average UK values falls of 11% in 2009 are likely to result in the market overcorrecting, setting the platform for a bounce back in 2011 once economic growth is restored and the credit crisis has eased."

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However Mr Macnab said exploiting affordable housing will remain difficult for large sections of the market as there is little sign of a "thaw in the current mortgage freeze".

"Cash buyers and the equity rich who have benefitted from recent increases will be well placed to take advantage of the rapid fall in prices. This is particularly true of those prepared to take a medium-term view of the market and balance this against the risk that the economic outlook will weaken further."

There is now little regional distinction in terms of the effect of the downturn, with the pockets of resistance that were identifiable in the Spring, no longer evident. While the Scottish markets held out for longer, they have seen similar falls to those seen in England in each of the last two quarters.

Macnab continued: "Based on our valuation indices, we anticipate that that the worst of the price falls will be over by the end of Spring 2009. The latter part of the year will be more optimistic. However, other reports which are based on actual mortgage transactions will not reveal this trend until later in the year."

The property specialists also predict that purchasers will feel that the lure of higher yields will beat returns from alternative property investments and that longer-term capital growth might be less risky than investment in stocks and shares and other alternative investments.

(GK/JM)