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Prices are unlikely to stage a marked recovery while banks are still reluctant to lend to companies as well as individuals. Mark Dampier of Hargreaves Lansdown said: “With the credit conditions as they are, commercial property is unlikely to begin a recovery for at least six months.”

Despite the immediate gloom, professionals said there would be some great buying opportunities in the coming months.

Matthew Richardson, of Fidelity International, said: “The night is always darkest before the dawn. The next 18 months will offer the best opportunity to aquire commercial property in a generation.”

F&C Reit Asset Management, the specialist arm of F&C Asset Management, plans three fund launches next year to capitalise on commercial-property valuations.

RESIDENTIAL PROPERTY

Rightmove, the property website, predicts the market will trough in 2009.

Rightmove’s Miles Shipside said: “We predict that overall prices are now within 10% of bottoming out. We are likely to see prices in 2009 at levels that persuade cash-rich buyers to re-enter the market.”

Seema Shah, of Capital Economics, warned it could be late 2010 until average house prices hit a floor. “With the economy heading for a deep recession for at least two years . . . house prices could continue falling through 2010.”

BUY TO LET

Despite predictions of a sell-off in the buy-to-let market, landlord arrears matched the wider market until last month.

Fionnuala Earley, chief economist at Nationwide, predicted a sell-off among buy-to-let investors who can no longer secure rents high enough to cover mortgage repayments. Landlords could also struggle to remortgage. While banks and building societies were lending to those with deposits of about 15% in 2007, they now require 25%.

Aaron Strutt, of Chase de Vere Mortgage Management, said: “If more lenders don’t start relaxing criteria, then 2009 could be the year many landlords are forced to sell.”

I fear I’ll have to sell some houses

Chris Lewis of Warrington fears 2009 will be the year he has to sell some of his buy-to-let properties.

The 50-year-old engineering and IT consultant who has invested in 20 properties with business partner John Hough (above left), faced a £2,000 a month rise in repayments this year when some of his fixed-rate deals expired and he was unable to remortgage due to price falls.

He was was thrown a lifeline in October, when the Bank of England began cutting rates. They have since fallen 3 percentage points. In 2006, Lewis took out six two-year fixed-rate deals with Paragon at 5.4% — however they reverted to 1.6% above Libor, the interbank lending rate, when the term expired. Libor soared to 6.3% in October — although it has fallen to 2.9% following Bank rate cuts.

Lewis said: “This year was awful. I am now starting to see some decent rates — but I’m not eligible for them. As long as interest rates stay low for the next two years I should be okay.”

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