And there could be worse to come, according Richard Donnell, author of the report. "Poorer prospects for capital growth, low yields and a weak rental market lead us to believe that that investor demand will fall back sharply over the coming year," he said.

Fewer investment buyers means that developers will need to focus on owner occupiers as the key source of demand. A choosier, more price sensitive breed, they buy later into a development's life than the investor and this is set to have an impact on developers' cashflows, especially at a time when marketing costs and the use of sales incentives are on the increase.

And although some developers are holding back from new schemes, FPDSavills expects market supply to increase. "Whilst the quantity of standing stock is lower than a year ago we expect it to be much higher this time next year. This will be a combined result of a generally much lower take-up over 2003 and indirect competition from recent purchasers, whose concerns over the property market may prompt them to sell their virtually new properties on the market second hand."