Why we’re plunging into a falling property market

Offer accepted on: three-bedroom flat in Fulham for almost £600,000 down from asking price of £800,000. Saving: almost £200,000.

Alex Daly and her sister were looking to invest around £400,000 to £600,000 that they have pooled from savings. "I've always believed in bricks and mortar, something you can touch," she says. "And with prices where they are at the moment, I hope a property will yield better than a bank."

Mrs Daly has been looking in the Fulham and Chelsea areas for flats that would make good rental propositions so they need to be near the Tube and, if possible, a "fun, open place with two or three bedrooms".

"A lot of friends say wait', but just as you don't know when you're at the top of the market, you also don't know when you're at the bottom. We've had an offer accepted on a flat because we didn't want to be up against lots of competition when everyone else piles in next April, May or June, or whenever. Also, we're looking at it for the long term, as we both have young children, so it doesn't matter so much if prices fall a bit further before recovering later."

Mrs Daly says that although they want to buy a property that "ticks all the rental boxes" she is being deliberately cautious about likely rental income.

"We've done our research quite scientifically and calculated all our sums on the basis of the lowest possible rent for a property of that size in that part of town. We made an offer that was a lot lower than the asking price — some 25 per cent, saving us around £200,000, and it has now been accepted. We hope everything will be completed by the end of February."

The Foreign Investor

Bought: two-bedroom flat in Ealing for £341,000. Saved: £9,000.

Based in Sweden, Monica Prakash, a 48-year-old jewellery saleswoman, is a keen investor in properties in London who now owns three flats and is looking to buy a fourth.

"London is definitely still a good long-term investment but you need to know your area and your property well," she says.

"It's obviously particularly good at the moment, and we've just bought a property in a block in Ealing — where we already have two other flats — at a very reasonable price. Next year may be cheaper still but I still think that now is a good time to buy as you definitely don't want to miss the boat as markets can move quickly." Mrs Prakash paid £415,000 each for two flats in 2007 that had been on the market for £450,000.

This year she was able to negotiate down from the £350,000 asking price to just £341,000 for a similar property. Like the two other flats, the new one will be rented out and Mrs Prakash has no doubt that she will find ­tenants.

"We refurbish our flats and work closely with a local managing agency who are very good," she says.

Mrs Prakash, who first became interested in London when she planned to move here from Gothenburg, said buying a flat this time had been far more ­complicated and long-winded.

"It took four months even without a chain, whereas normally we would expect to do the whole thing in eight or nine weeks. The problem was the new stringent lending conditions, requiring far more documents and checks.

"There was also less credit available — although you can of course use that to negotiate on price."

The City Buyer

Offer initially accepted: on a ­three‑bedroom house in Fulham for £750,000, down from £1.1 million. Potential saving: £350,000.

Arron Smyth, a 29-year-old City trader, is feeling optimistic. A first-time buyer, he intends to buy two or three properties within the next 12 months.

"I plan to buy two two- or three-bedroom places in Chelsea or Fulham and then a larger three- or four-bedroom house in Surrey. I'm mostly looking at houses in London rather than flats as that seems to be where you're getting the good deals at the moment," he says.

"That said, you still see a lot of sellers who have not yet been hit by reality and cling on to old, unrealistic prices.

"I've been quite aggressive with my bids, going at least 20 per cent below ­asking price and some estate agents have been difficult about that. But it works where the agent is being realistic as well as the seller."

Arron had his £750,000 offer accepted on a house originally put on the market at £1.1 million. "The seller cut the price to £900,000 after failing to sell, and then I bid £650,000. They rejected that but accepted my £750,000 bid.

"I only lost the house when another bidder with cash came in at that level and they decided to go with him. I have another couple of low offers on houses, and if they don't work out I will just see what the next few months bring.

"I'm not in a huge hurry, have my finance in place and have a large deposit saved up. When unemployment really kicks in, we'll see what happens. But even before then I think it's a good time to buy, especially if you're taking a five- to 10-year view as I am."

Just Left Home First-Time Buyer

Bought: one-bedroom apartment, Tower Hill, for £300,000. Saved: £19,000

Annie Bowden, a 26-year-old City solicitor, quickly made up her mind to buy when she found commuting from the family home in Brentwood, Essex, too much.

She organised eight viewings of apartments in the Tower Hill area in one day, and originally put an offer on one before changing her mind.

"I thought about it over the weekend and then withdrew. I went back to the flat I'd seen first and put in an offer of £300,000 on the asking price of £319,000, which was accepted even though the agent said it never would be.

"The first flat I offered for, I could have bought for £292,000 against an asking price of £345,000 but I wanted somewhere cosy I'd feel at home in.

"The flat I've gone for is in a lovely, converted Art Deco building and has beautiful wooden floors so I feel very lucky. I can even walk to work.

"It may not have been such a big reduction but it's worth the extra money.

"It was undoubtedly the best of the bunch but I was surprised at how many good properties there were on the market. The Wapping agent I dealt with, FJ Lord, said it was their busiest December ever."

The flat that Annie is buying is on the market after a divorce, although it had not been for sale very long. "The vendors obviously had to sell, and made completing by Christmas a condition of sale," she says.

Desperate First-Time Buyer

Offer accepted on: two bedroom flat in Battersea for £430,000. Saved: £20,000.

Ed Portman, a 25-year-old financial PR executive, has been looking to buy a flat in the SW11 area since July but has not noticed many price falls.

"I've just had an offer accepted for a two‑bedroom, two-bathroom flat in Battersea at £20,000 below the £450,000 asking price, but overall there haven't been many discounts," he says.

In fact, despite reports of a complete dearth of purchasers, Ed actually had to outbid another buyer to win his chosen property.

"The vendors had already accepted another bid, but I came in at the eleventh hour with a higher offer."

After five months of looking, he wanted to complete a deal and sign up to his new home but the market is not always as kind to buyers as some expect. "I had my heart set on one place that hasn't moved for five months but the vendors are sticking to that original price and so I couldn't afford it," he says.

"It was the only one I'd seen since I had been looking that I really wanted to live in, apart from the one I am now buying.

"People have advised me to hold on because prices will eventually tumble. But I just wanted to get on with it once I'd found somewhere I really liked. I had the money in equities before, which were really being hammered. So it made sense to buy an investment that I could live in, too, and hope that one day it will increase in value."

The New Londoner

Bought: two bedroom garden flat in Islington for £345,000. Saved: £50,000

TIM Welton, 28, moved down to London in April after changing jobs in his field of oil and gas consultancy. The original plan was to sell his old flat in the Midlands and buy as soon as possible in the capital.

Selling was harder than he thought, so Tim rented out his original flat then started looking to buy in London in June. Waiting before he pounced has saved him thousands.

"Back then people were asking pretty unrealistic prices," he says. "When I looked a couple of weeks ago almost all those same properties were still on the market at the same price. The ones that had gone had had to slash their prices to get away. "

Eight months on in mid-December, Tim moved into his two-bedroom garden flat in Islington, which he snapped up for £345,000 — a price pretty unthinkable this time last year.

"It had just gone down by £20,000 when I saw it and then I got it for £30,000 under the new asking price. It first went on the market at £395,000 —which was obviously too expensive. Another flat I looked at is still on the market for £430,000 after several months. It is no way as nice as my new place and is just not going to sell.

"I'm pretty pleased at how it's turned out and as it's a buyer's market felt I had a clear field with the flat I wanted and never felt rushed. As I intend to stay in this flat for a while, I don't mind too much if prices fall a bit further still.

"I had a big deposit, got my mortgage easily and fixed the rate for two years. If I then want to move again, the prices of other properties will have fallen just as much so it will make no difference in the end. You're not losing real money."