"In the long-term, there are good prospects for the recovery of the residential markets in CEE, based on a low housing saturation rate and a vast backlog demand for housing," said Kevin Turpin, Head of Research Central Europe at JLL. "This is especially true for markets with strong demographic fundamentals."

According to the JLL-REAS report Residential Markets in Central European Capitals, liquidity shortages and more restrictive mortgage policies in the banking sector translated into a sales standstill of residential properties throughout the CEE.

Among the most affected markets are certainly the three Baltic States, with Latvia being in the toughest situation, along with Ukraine, which faces a recession, it said. Hungary is also badly affected by the crisis, but its residential market has anyway been performing rather poorly in the recent years.

"Poland, Slovakia and the Czech Republic are amongst the most stable housing markets," JLL-REAS said. "Nevertheless, all three markets experienced very weak demand levels and first price decreases have already been observed."

Slovenia and Croatia are so far also less affected, yet, the number of transactions has decreased and unsold supply is accumulating. Romania and Bulgaria were hit hard by the credit crunch and are experiencing a standstill in sales, as well rapidly falling price levels, the report said.

"Now is the right time to start preparing and undertaking investment decisions, before the market starts to recover," Turpin said.