Click here to see the UK house price forecast from Knight Frank

Billions of pounds are now flowing back into the banks, which means that the mortgage market, and consequently house prices, should - in theory - begin to improve. As Nicholas Leeming, director of propertyfinder.com, puts it: “This week a faint glimmer of hope has begun to emerge at the end of the credit-crunch tunnel.” However, serious lessons have been learnt and confidence is not what it was. Are we really on the road to recovery?

Justin Urquhart Stewart, of Seven Investment Management:

“We are in for a slow, grinding recovery over a matter of years - prices will not suddenly bounce back. Supply and demand are both falling, and with agents selling only one property a week we have a false view of the housing market. It is a bit like a bag of Maltesers. There are lots of areas, each with their own tiny bubbles inside, that could independently go off at any time. We have a false view of the market because we cannot see what is happening in each of these tiny bubbles.”

Liam Bailey, head of residential research at Knight Frank:

“Even with the Government saying that it will try to encourage the mortgage market, I can't see house prices falling by anything less than 30 per cent. There will not be a recovery until 2010 at the earliest. If we can increase the number of sales, that would be a boost, but I don't see sales volumes recovering until spring next year. In many parts of the country, prices will have fallen by up to 30 per cent already, so next year buyers will feel more confident that they could be buying at the bottom, and banks could also be more inclined to lend because they will not be lending on an asset that still has 10 or 20 per cent left to fall.”

Jonathan Cornell, Hamptons International Mortgages director:

“The £37 billion government bailout will improve the mortgage market, but anyone expecting a silver bullet will be disappointed. It will take several weeks to bring out better rates - lenders are still in a state of confusion. The Government will want more support for first-time buyers, so we will start to see the re-emergence of 90 and 95 per cent deals. Even lenders that have not been nationalised will benefit from the increased liquidity in the market.”

Ray Boulger, senior technical adviser at John Charcol:

“The Government's commitment to bring back lending to 2007 levels has not been thought through. Nationwide and Lloyds TSB were the main banks still offering high loan-to-value (LTV) mortgages. On Tuesday, Nationwide cut its LTVs to 85 per cent, leaving LloydsTSB to mop up that market. The fallout will prove too much, and it will have to withdraw these deals too.”

Yolande Barnes, head of research at Savills:

“Even if it's in 20 years, the market will boom again. It depends on the feel-good factor, which is anyone's call. We still have not had the full impact of rising repossessions on prices but there is now a question mark over whether we will see this, because with the Government running the banks it might want to handle arrears cases differently. Once prices have fallen by 25 per cent they could bounce around the bottom for a few years, which is what happened between 1992 and 1995. Rental yields are an indication of fair value, and they are almost there already.”

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