Residential property will become an attractive investment again, and it could be sooner rather than later. That’s the cautiously optimistic view of Michael Fiddes, who heads the National Estate Agency Department of property agents, Strutt & Parker.

“I’m not calling the bottom of the housing market because, in these highly unpredictable times, I don’t think any of us can do that, “ he says: “What I am saying, however, is that residential property is already looking an attractive investment again, especially when compared to the highly volatile equity markets.”

Mr Fiddes points out that while average house prices may have fallen by as much as 20 per cent in the last year, the London stock market recently managed to lose a similar amount in less than a fortnight, leaving shares some 40 per cent lower than they were at their 2007 peak.

“There’s no doubt we’re experiencing a period of major adjustment – both for property and share values – but with dividends under pressure and interest rates seemingly on their way down, the returns from property will start to appeal to investors again. After all, there are already well-let residential investment opportunities out there you can buy at an initial yield of 8 per cent."

Mr Fiddes also believes, that in such uncertain times, buyers will also return to the owner-occupied housing market.

“Unlike owning shares, owning your own house has intangible benefits too – people take real pleasure in owning the house they live in. And you can’t say that about shares. That’s why I believe as people adjust to the new economic conditions, buying the right house will move a lot higher up their list of priorities.”

“We’re already seeing signs of that at the middle-to-top end of the market, where we do much of our business. Most of our buyers are looking to buy somewhere they will want to live for the next 20 years.”

Mr Fiddes believes he’s being realistic rather than optimistic. “We’ve been through a period of readjustment – and there may be a little more to come – but the undeniable fact is that the figures for property are beginning to look more attractive again, especially for buyers with reasonable deposits.

“First-time buyers continue to have a more wretched time but, for those higher up the property ladder, mortgage funds are often more available and there are significant opportunities for owner-occupiers to trade up to a bigger house.”