Bargain time for British houses

Press, 5 March 1982, Page 15

Bargain time for British houses

By

RICHARD MILNER,

“Sunday Times”

For the first time since the thirties, house prices in many parts of Britain' are actually falling. Estate agents have woken up to a pressing need to shift property, even occasionally, at "sacrificial” cost to vendors. And a new word is creeping into their trade vocabulary, alongside such classics as "attractive” (non-descript), "bijou” (cramped) and "character" (rather odd). It is "drastic.” as in the marketing phrase "drastic reduction.”

Here are some signs of the changing times:

© A London penthouse flat overlooking Kensington Gardens was put up for sale in 1980 at £1.5 million. The vendor rejected a "cheeky” offer of £900,000. Recently he had to settle for £600,000. 9 An eighteenth-century

country mansion in Bedfordshire with six bedrooms, three bathrooms and four acres was initially offered at £200,000. There were no takers. Months later, the price has now been dropped by £30,000. ® A less historic six-bedroom house in Hampstead Garden Suburb, "in an unrivalled position with enormous potential.” was put on the market last year at £175,000. It has been reduced to £ 135,000. ® A four-bedroom detached house not far from Manchester was advertised for £ 49,950 when its owner had to move for his company, which guaranteed the price. It has been slashed to £35,000 for a quick sale. 9 In some areas, buyers have even been offered free conveyancing as an incen-

tive. Such mark-downs of between 15 to 60 per cent are not typical — but they do indicate a basic shift in the property market. It is not about to collapse but, for the time being at least, it has been transformed from a seller’s market to a buyer’s market. How far house prices have fallen is open to argument. According to provisional figures from the Building Societies Association, the average decline last year was 5% per cent. Estimates from individual societies vary according to their particular experience, from the optimistic Anglian Building Society (which estimates that even prices of "modem” or post-1919 houses rose by just over per cent through the Abbey National and Nation-

wide (prices down 2 per cent on average) to the Leeds Permanent (with an estimated fall of just over per cent).

In real terms the average decline is equivalent to more than 15 per cent.

Price reductions have not been prompted by a scarcity of mortgage money. Building society advances, augmented by bank lending, were running at record levels last year in spite of high interest rates. (Barclays branched into this business in November 1980 and is now lending to home buyers at the rate of £7O million a month.) What did make a critical difference in the last three months of 1981 was the re-emergence of the “buyers’ chain” —

where one failure to complete a deal triggers off a series of non-completions.

The result is a pile-up of unsold properties and, inevitably, lower prices. But many sellers have been unable, to adjust to the idea that house prices can fall. (Throughout the seventies, prices rose on average by 16 per cent a year and generally outstripped inflation.) After shopping around several agents, they opt for the maximum suggested valuation. "Over-optimistic prices have had to be discounted,” reports Chestertons, the large London estate agents. First-time buying has boosted the price of terraced houses and small semi-de-tached houses, while top-of-the-market houses are still in fair demand. Middle-priced neo-Georgian "executive" houses are proving hard to move though, and properties

needing improvements tend to be given the go-by. Sellers now face the choice of price-cutting for a quick sale or holding on, perhaps for months, for a buyer prepared to pay a better price. “We’ve had property on the market for over a year and finally got within range of the asking price,” Strutt and Parker’s office in rural Kent reports. "Within range of,” apparently, means an agreed reduction of 5 to 10 per cent. But ■ tough and persistent buyers can do better. “You keep making what they call ‘insulting’ offers,” says one, "and wait for them to come down.” So far, he has clipped £35,000. or 22 per cent, off the asking price. Unlike many sellers, most buyers can afford to wait until the market picks up. Footnote: £1 is worth about $2.34.