Britain is half way through the housing market correction, with prices likely to fall by a further 15% before the bottom of the market is reached, it was predicted today.

Estate agent Knight Frank expects the average property to lose 30% of its value from the market's peak in late 2007 to its trough, pushing prices back to their September 2003 level.

But while the group does not expect the bottom of the market to be reached until late 2009 or early 2010, it is forecasting a pick up in sales next year.

Knight Frank expects sales volumes to hit their low point towards the end of this year, with transactions running at just 30% of their long-term average, before recovering to reach 60% of their average level by the second half of 2009.

Liam Bailey, head of residential research at Knight Frank, said: "The central question for anyone who owns their own home is - when will prices stop falling?

"Our forecast suggests that we will be closing in on the bottom of the market during late 2009/early 2010.

"Prices in the UK peaked in late 2007 and have fallen sharply since that point. Our forecast suggests that we are now at least half way through the process of price falls, with around 15% of an estimated 30% peak-to-trough decline already factored into prices."

But the group said some markets were experiencing very different conditions to the national average.

The regional new build sector has already seen substantial price falls, with prices down by 50% in several locations, suggesting that values do not have much further to fall, as the "fair pricing" level is almost at hand.

Equity rich investors and speculators are already back in the property market, targeting distressed sales of homes and land, while there are a lot of other buyers watching the residential market very closely in a bid to buy property when prices hit their floor.

Knight Frank said house prices would take some time to recover to their 2007 peak, with this unlikely to happen until 2015 on average, although there will be widespread variations, with the prices in central London likely to hit this level by 2012, while it will be 2019 before this happens in Northern Ireland.

The group said its recovery picture was based on the assumption that mortgage providers would continue to adopt a conservative lending approach as the credit crunch unravelled.

But it added that the UK did not have the oversupply problems of Spain and the United States, and the country's housing shortage would become more apparent with time.

David Miles, Professor of Finance at Imperial College London, yesterday predicted that house prices could fall by a further 5% to 10% before the bottom of the market was reached.

But he added that the falls needed before the market bottomed out could be much smaller if the cost of funding fell by a further 50 basis points.