Warnings of an "apocalyptic" crash in residential property markets - with the subsequent knock-on effects on developers and commercial interests - are completely unfounded, experts in Birmingham claim.

Mark Evans, a partner at Knight Frank, said: "Like most people involved in the property sector, Knight Frank recognises that 2007 has been a challenging time for the UK residential market and that we will continue to deal with issues such as tightened processes for credit approval, static house prices and uncertain consumer confidence as we move into 2008.

"However, our experience and market intelligence suggests that those who make apocalyptic cries of a market crash are not taking a rational and balanced view of what is actually happening in the marketplace, or the range of factors that will help to offset the negative aspects of the current housing climate."

He added: "In terms of new homes schemes, we believe that fewer developers will commence construction, which is likely to lead to a reduction in supply in 2008 and less choice for buyers.

"This perpetuates the trend that we have seen in the past year, when sales volumes dropped by approximately 20 per cent between 2006 and 2007. Prices should also continue to stabilise.

"However, the silver lining is that the developers who manage to hold out during this difficult time will see less competition in the market, and be well placed to attract those buyers who are in the market for a new home.

"It will also push developers to refine their brand and create schemes that stand out in the marketplace, such as mixed use developments or iconic architecture, as these are the schemes that have the chance to maintain their volume of sales and surpass the competition.

"There is the possibility that first time buyers are likely to delay their property purchase till confidence in the market strengthens, and this will drive up demand for rented accommodation, spelling good news for buy to let investors.

The reduced number of new properties coming to the market could push up demand even further by creating a shortage of supply.

"Indeed, there is also evidence that rents are increasing, so altogether there is a potential for higher returns on rental yields."

Knight Frank points out that land buying activity - the driving force for the residential scene - is often ignored.

David Fenton, head of residential for Knight Frank in the central region, said: "The credit crunch has certainly meant that it is tougher for developers to secure the funding they need to buy land and commence construction and there is evidence that some banks are tightening their processes further to guarantee that they only lend to the most promising prospects.

"On the other hand, this may mean fewer transactions fall through, and ensure that only high calibre developers take forward the projects that do materialise.

"Another clear trend is that many cash rich individuals and companies are entering into the land market and acquiring opportunities without residential consent to promote them through the planning process to ultimately gain a consent. There is increased opportunity as institutions and companies run for cash. This will reward the opportunists in the market place.

"There is a word of caution to the house builders that they may well pay a premium for their raw material when better times return.

"In short, there are very real challenges in the market, which will not disappear overnight.

"However, it is equally true that commentators are often focusing disproportionately on the negative trends and overlooking a lot of positive movement in the marketplace."