William Hill, head of property at Schroders, predicted the recovery of the UK property market would begin in 2010 when he said equity investors would return to the market when he spoke at Schroders’ media round table event.

He predicted property values would fall by 40-45% between the beginning and the end of the downturn which is a steeper fall than in the early 1990’s recession. However, he said that the lack of oversupply and rental growth seen in the 1990s, combined with a return of international interest in the UK market, meant that prime property assets would begin to stabilise.

He said: “ We will see a two-speed market. There are signs of emerging stability in the prime area of the market, but for the secondary market, the bloodbath will continue. It is a nasty problem that will take much longer to sort out.”

Hill criticised the ‘huge inconsistencies between valuers’ and warned that there was ‘mistrust over where valuations are because of the incredible discrepancies between funds’.

Mark Callender, head of property research at Schroders, forecasted a -15% fall in rental growth from June 2007 to 2011, lower that in the 1990s, with retail only falling by -5%, but offices by -25%. However, he predicted that the City office market where there is oversupply would see a fall of -40%.

Callender also forecasted property returns of -17% this year, -10% next year and -6% in 2010. However, he said that property income return is likely to reach +7% even if voids increased.