Research by Savills shows that the credit crunch is now affecting even the best property with values down by an average of more than 10%. This is considerably more than the 2.4% falls recorded for these properties in April.

A survey of Savills agents established the amount by which the realisable sale price of properties in various price brackets had fallen since the peak of the market, while assuming that there would be a limited period of marketing to secure a sale.

The survey, when first carried out in April, showed that the 'best in class' properties, fell marginally whereas values for blighted or compromised properties had fallen by 12% and average property values fell by 6.9%. By October the effects of a lack of mortgage finance and weakened sentiment had filtered through to all qualities of property albeit to varying degrees, with average properties falling in value by 16.4% and blighted properties falling by some 24%.

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"Whilst the best properties have fallen in value, they remain those most likely to sell in current market conditions, with those purchasers, being in a much stronger position to secure a better class of property. Cash buyers are in the driving seat and because there is less competition from those requiring a mortgage, they are more likely to secure the best properties and can do so at a identifiable discount to the top of the market," said Lucian Cook Director of Savills Residential Research.

"By contrast blighted properties have become virtually unsaleable in many cases, sellers remain unwilling to take such a large hit on values and buyers don't feel that they need to compromise. These properties are always harder to sell in a tough market, when discounts become more pronounced."

(CD/JM)