Ignore the doom-mongers — this is the year to buy property, especially if you’re trading up.

When Diane Valentine decided to move to Kent, after her daughter Olivia, 16, got a place at Tonbridge Grammar School last year, she found the home of her dreams in nearby Sevenoaks. It was detached, with four bedrooms — but, sadly, at £700,000, was outside her price range.

Valentine, 45, who works for the investment bank JP Morgan, was able to bide her time, though, having sold her semi in Hertfordshire several months earlier for £500,000. After a sale fell through last spring, the house’s price was slashed by £100,000. Then, several months later, it was repossessed and came back onto the market for £590,000.

Valentine, who was renting in Tunbridge Wells in the meantime, bought the Sevenoaks property in December for just £525,000. She completed three weeks ago and, with Olivia and her older daughter Dominique, 23, intends to move in once the new kitchen is ready and the decorators have left.

“I was so pleased, because I couldn’t afford to pay more than I did, and I had been looking at it and looking at it,” Valentine says. “It’s a fantastic location and it’s all gone smoothly.”

The general consensus is that 2009 is not shaping up to be a good year for Britain’s housing market. Prices are still falling — after a 15.9% drop in 2008, according to the Nationwide — sellers are accepting offers of 20% less than their asking prices and interest rates have been dropped to an all-time low in an effort to get things moving again.

Provided you’re not caught in negative equity, and can put down a decent deposit (see panel, page 8), now could be a good time to buy, whether you’re taking the first tentative step onto the ladder or trying to move up a rung — not least because, according to the Nationwide, house prices are back below their long-term trend for the first time since 2001.

It is a message that appears to be getting through to would-be buyers. Figures released last week by the Royal Institution of Chartered Surveyors showed that although the number of properties sold hit a record low at the end of last year, the number of inquiries rose at the fastest pace since August 2006.

“We’re getting to the stage where mortgage payments are becoming cheaper than renting,” says Miles Shipside, commercial director of Rightmove, the online property portal. “This is set to be the year of the quality property deal.” Exclusive research for The Sunday Times by Savills estate agency shows that by the third quarter of 2007, when property values peaked, buying was 44% more expensive than renting. With the subsequent fall in prices, however, buying is becoming cheaper again.

“It’s a cracking time to be buying,” says James Greenwood, the managing director of the property-search agency Stacks. “There’s hardly any competition out there at the moment, so you’ve got the field to yourself. Prices have been discounted, there are distressed sellers who have to sell and there are some real bargains to be had, anything between 30% and 35% off peak value. We haven’t seen anything like this for years — it’s probably the best opportunity for a decade.” Examples of dramatic reductions abound, even though their scale is often due to unrealistic original asking prices. One of the most heavily discounted houses on the market is Ancaster Lodge, at the top of Richmond Hill, southwest London. The house, which has five bedrooms and an indoor pool, came onto the market last year for £20m, but has just had its price slashed by 30% to £14m. Nor are such cuts restricted to top-end properties: there are plenty of reductions in the mainstream market.

So where — and what — should you be looking to buy? With the exception of Northern Ireland, where prices have collapsed by 34.2%, and Scotland, where falls have been modest, the market has been falling at a fairly steady rate across the country. By contrast, earlier periods of dramatic change — either upwards or downwards — saw significant regional differences, which made it a good time to move in and out of London, from the north to the south of the country or vice versa.

This time, it’s more about getting what you want in your chosen area, whether it’s a bigger house, a property closer to a good primary or somewhere with a garden.

In London, financial insecurity in the City and the subsequent fallout in the labour market have led to price drops that accelerated towards the end of last year, with an average fall of 15.1%, according to the most recent figures from Nationwide.

Prime areas such as Knightsbridge, Belgravia, Mayfair and Chelsea have been hit the hardest: the latest figures from the estate agency Knight Frank show that properties costing £1m-£2.5m are down by 22% from their peak, though agents are hoping for a recovery led by euro and dollar buyers, for whom the weaker pound means prices are beginning to look relatively cheap.

For the majority of us, who are not in that league, of more significance is what is happening in those areas particularly popular with families. Here, lifestyle changes such as children moving to new schools result in forced sales, which means fresh opportunities for buyers.

Nick Goble, managing director of Winkworth’s franchised offices, says that for those living in Battersea and Clapham in southwest London, now is the time to upsize. “Three- to four-bedroom family houses have taken quite a significant hit, so people who are upgrading into this type of property are getting good opportunities,” he says. As an example, he cites a house he sold recently on Tregarvon Road, on the north side of Clapham Common, for £625,000. Last year, he says, it would have fetched £750,000.

Simon Waters, 35, a partner in a law firm, is hoping this will work for him: he is planning to put his two-bedroomflat in Battersea on the market in order to trade up to a two- to three-bedroom house in the area. “Because I haven’t moved for 10 years, I’ve built up quite a lot of equity,” he says. “So I should be able to get a mortgage and move up the ladder.”

Across the river in Fulham, meanwhile, “everything is a good opportunity at the moment”, says Steven Clarkson, manager of the estate agency Sullivan Thomas’s Fulham offices. “All the streets have softened and vendors are more realistic.” Flats have come down, in some cases by £100,000, and houses by up to £200,000. Supply, however, is dwindling.

Now could also be a good time for those keen to flee the capital. What Nationwide terms the “outer southeast” has seen the third highest fall in England — 15.4% in the past year. This is good news for Mark and Georgina Robinson, who have put their 1½-bedroom flat in Wimbledon, southwest London, onto the market and want to move to Arundel, West Sussex. Thecouple, who have a six-month-old daughter, hope their £350,000 budget will buy them a substantial house.

Now could also be a good time for those keen to flee the capital. What Nationwide terms the “outer southeast” has seen the third highest fall in England — 15.4% in the past year. This is good news for Mark and Georgina Robinson, who have put their 1½-bedroom flat in Wimbledon, southwest London, onto the market and want to move to Arundel, West Sussex. Thecouple, who have a six-month-old daughter, hope their £350,000 budget will buy them a substantial house.

“We wanted to get a lifestyle where we could be close to the sea and nice countryside, but still within reasonable distance of my business in Kingston upon Thames and London in general,” says Mark, 30, who runs a specialist running shop, Lanson Running. “We’d like a four-bedroom property, which would mean we wouldn’t have to move again for a few years, though if we’re going to be further into town, we may have to accept a smaller place.”

Not that it is entirely a buyers’ market. Nick Ashe, a director in the search agency Property Vision’s country department, says that some of the best properties, such as Geogian rectories, farmhouses or pretty period homes in really good locations, are holding their prices.

“Even now, if they come onto the market, we have heard examples of competitive bidding for the really good stuff, which has probably fallen by 10% to 15% rather than 25%,” he says. “The message is, if you see something you like, then get on and buy it — because it probably won’t be there in six months’ time.”

The same applies to prime properties in attractive places such as Oxford, Winchester and York. In Oxford, for example, “a £2m detached house within a stone’s throw of the Dragon barely fell at all in 2008”, says Mark Charter, head of Carter Jonas’s office in the city. “Only half a dozen of them come to the market each year anyway.” He says that Oxford is also good for investment buyers. For example, his agency is marketing a two-bedroom flat in the city centre for £227,500, which is already let for £925 a month.

East Anglia, which has seen slightly higher than average falls in the past year — 16.6% — is also a good place for those hoping to trade up. James and Mary Tweed are selling their five-bedroom farmhouse in Belchamp St Paul, on the Essex/Suffolk border, for £785,000 through Carter Jonas, and want somewhere with more space for their four children, dogs and chickens, as well as outbuildings from which James, 35, can run his online training company. They have £1.3m to spend and would like to stay in the area. “We think the market will probably fall further, but that during this year, opportunities will come along,” James says.

Martin Belton, consultant at Martins, an estate agency based in Hunstanton, Norfolk, says they could be in luck. “If you’ve got some money, there are some good deals to be done,” he says.

Belton is advising vendors to take a hit of 10% or more on their asking price, and has several examples of properties that have had their prices slashed in recent months. For example, he is marketing the Lighthouse, in Hunstanton, a four-bedroom, Grade II-listed property, which was reduced in December from £695,000 to £499,950.

In fact, properties in areas popular with second-homers could be a good buy at the moment, as that cottage by the sea becomes more affordable again. “If you’re down here looking now, and able to buy, then it’s as good a time as any in the past 10 years,” says Andrew Chilcott, director of the Cornwall-based agency Lillicrap Chilcott.

Again, if you’re after something really special, you may not be able to drive such a hard bargain, but buyers looking now will benefit from a certain amount of choice and more time to look.

Rick Marchand, director of Mar chand Petit, based in the company’s office in Salcombe, south Devon, is more positive. “It’s a much better time to buy than in the past two years, because you can get the same thing for a lot less,” he says. “There are opportunities that are not to be missed — spectacular houses in super waterfront locations, which come to the market once in a generation. If one of those comes up now, don’t hang around.” Marchand cites the example of a five-bedroom house in Bantham, at the mouth of the River Avon near Salcombe, originally on the market at £5m, but now reduced to £3.75m.

More modest properties are also potentially good investments, he says. One-bedroom flats, for example, enjoy a longer letting season than houses because of their appeal to young professionals who aren’t tied by school holidays. “People have to be mindful of their own holiday needs, but there are quite considerable tax advantages to buying a holiday home that can be let as a business,” Marchand says. He advises buying something easy to manage, preferably with views of the water or near the beach.

It’s the same story up north, where, in Northumberland, holiday properties have been doing remarkably well. “Those who are adventurous and want to buy themselves a treat that will more than wash its face are looking at buying holiday houses,” says Sam Gibson, an agent in Strutt & Parker’s Morpeth office. “It’s not only a lifestyle thing, but a sure income. While the credit crunch is going on, people still want to have their holidays, and as the euro goes up, they will holiday in England.”

Strutt & Parker is selling the Granary, a four-bedroom stone cottage within walking distance of the beaches on Northumberland’s heritage coast, for £490,000 (www.struttandparker.com). But get in there quick, Gibson advises: “The choice is not going to get any greater in the next few months.”

So far, so optimistic, but if, as most market analysts believe, prices continue to fall throughout the year, why not wait a few more months before jumping in? After all, who wants to buy a depreciating asset?

“It’s a trade-off between buying now, when prices probably haven’t hit the bottom, but you have a much wider range of stock to choose from, or buying later in the year, when you will probably have less choice,” says Lucian Cook, director of research at Savills. And, he adds, it is difficult to spot the bottom — especially as, by the time it shows up in prices, they will probably have started to rise again.

Valentine, for one, has no regrets. “My money was sitting in the bank, earning no interest — I wanted to put it in bricks and mortar,” she says.

The Sunday Times Sunday January 18 2009