The region continues to enjoy resilient property prices, despite widespread panic over tumbling valuations, says property giant King Sturge.

Prices are expected to drop by just two per cent between now and January 2009, making a total dip of seven per cent for the whole of 2008 – far below the 1991 property plunge.

The report said a combination of the £500m Northern Quarter deal, the supercarriers contract, and the proposed redevelopment of Fratton Park meant Portsmouth's housing prospects were looking up, and were shielding the area from the worst of the crisis.

Roger Sherliker, former chairman of Portsmouth Property Association and senior surveyor with property firm Hughes Ellard, said the city's broad-based economy left it ideally placed to ride out the turbulent market.

He said: 'Clearly the apartment sector is the worst affected, but it's not as bad an issue in Portsmouth as it is in Southampton, or as bad there as it is elsewhere.

'Developers built what they thought the market wanted, but vastly overestimated demand. Not everyone wants a two-bed flat on the 14th floor with no car parking, so there is an undersupply of actual houses.

'If this seven per cent drop is all there is, I don't think that's at all bad. It's a necessary correction rather than a collapse in value. I think these total, nationwide figures showing a major collapse are so misleading, and don't give a realistic picture of the local scene. We've got reason to be happier and more confident than in most other parts of the country.'

Meanwhile, the commercial sector is also doing well. The report shows prime yields in Portsmouth and Fareham are above UK average across the board, and edged ahead of nearest regional rival Southampton.

The figures show for prime office and industrial properties, investors in Portsmouth and Fareham can expect a return of 6.5 per cent, and 5.5 per cent for retail properties – at least half a percentage point ahead of the British average.