Property: Auction to the rescue in a sea of sinking prices: Yachting enthusiasts are lapping up waterside property at knockdown prices, reports David Lawson

IT WAS the ultimate Eighties dream; a plush new home with a boat bobbing at the bottom of the garden. Come the end of a busy week, you zipped down the motorway for a couple of relaxing days on the briny. Or you settled on the waterside and took the 7.50am commuter special to the office each day, confident of being back in time for a quick trip around the bay that evening.

With as many as three million boating enthusiasts sharing the dream, developers could not build fast enough. More than 2,000 marina homes sprang up along the South Coast alone during the boom years but prices still soared.

'We bought our two-bedroom town house for pounds 112,000 in the mid-Eighties,' says Ian MacGregor, who signed up in Hythe Marina near Southampton when it was still a sea of mud. 'At the peak of the boom it was probably worth around pounds 300,000.' But when the recession came, values proved as fragile as a boat in a hurricane. Prices have dropped around 40 per cent since the boom, according to Martin Edgar of the Waterside Properties agency. Mr MacGregor reckons his place is probably worth around pounds 230,000 today.

Marina Developments, which owns the Hythe complex and several others across the South, has not built a home in the past two years. 'Nor do we intend starting again,' says the managing director, Philip Mason. That is understandable, as the company has managed to dispose of only 20 properties in the past year or so, leaving around 60 empty, even at discounts of 15 to 20 per cent off already much-reduced asking prices. Yet last weekend he sold all but a handful within two hours: at a Bristol auction.

Mr Mason had tired of the struggle and handed over the reins to Kennedy- Wilson, an American firm of auctioneers which arrived in the UK last year and has built a big reputation among builders for selling difficult property.

The firm netted almost 5,000 inquiries through a combination of heavy publicity and low reserve prices. The minimum for a two-bedroom apartment in Hythe was set at pounds 80,000, compared with the previous asking price of pounds 140,000. But even this paled beside the pounds 35,000 for one-bedroom flats at Brunel Quay in West Wales, almost half the level Marina Developments had been asking.

Successful bids averaged 25 per cent more than reserves. But the cheapest Hythe property reached only pounds 103,000, and the most expensive - a five- bedroom/three-bathroom house - went for less than pounds 225,000. Mr Edgar has a similar one on his books for pounds 325,000.

A three-bedroom home at Ocean Village, another marina on Southampton Water, fetched less than pounds 150,000, compared with a previous advertised price of pounds 240,000 (although the buyers will have to pay another pounds 12,750 for exclusive use of a berth for seven years). A three-bedroom home at Brixham, on the market for pounds 235,000, was sold for pounds 143,000, and a two-bedroom apartment at Millbay Marina, Plymouth, went for the pounds 65,000 minimum (both require another pounds 9,250 for a berth). The cheapest seller was a two-bedroom apartment without a berth at Brunel Quay - pounds 38,000, compared with a pounds 62,000 open-market price. A three- bedder with a berth fetched pounds 64,000, a good 40 per cent less than previously advertised.

These huge drops are not as great as they might seem, as the developers were already undercutting advertised prices. 'But they show the underlying demand for such property,' says Mr Edgar. And this is bound to rise as the recovery strengthens and people become more relaxed about spending. 'There are very few places left for new marinas, particularly along the popular South Coast, because all the best locations have gone and there is greater concern over preserving the coastline. That means anyone buying at relatively low prices today will see a big rise in values,' Mr Edgar adds. This will not happen overnight, however, as there is still plenty of second-hand property available. Around 30 per cent of the homes that Mr Edgar handles have never been lived in by the original buyers. 'Many are let out by speculators who burnt their fingers during the boom,' he says.

In fact, the dream has never died for well-heeled boaties willing to pay a high price for the right berth: 9 of the first 11 houses and flats at Moriconium Quay in Poole were sold during the recession at prices from pounds 285,000 to pounds 500,000, says Steven Moseley of the developer Gemsa. Three more have gone before building has started, costing buyers at least pounds 120,000 for a two-bedroom apartment plus pounds 35,000 for a berth. 'I even have one reserved for the phase starting next year from a buyer planning future retirement,' Mr Moseley says.

One major change has taken place since the boom, however. In those days marinas were taken over by outsiders, often waving fat London pay packets. 'When the first pub opened at Hythe, the manager got a big shock,' says Mr Edgar. 'All those homes, but hardly a customer during the week. They were nearly all weekenders.'

But there are fewer part-timers at Moriconium, where as many as 100 homes are planned over the next few years. Mr Moseley says: 'Everyone comes from within three counties and all are self-made people who have had money sitting waiting to be spent. Now they are spending it faster.'

Some have homes in other marinas and are switching to take advantage of Poole's 24-hour access to the sea (most others are thwarted by the tides for part of the day). It means they can jump into their boat at any time, which is important when you are paying these prices. Others are trading up. Prices may have fallen since the slump, but they are still well above those of the early days.

Mr MacGregor is happy where he is. As commodore of an East Coast sailing club, he burnt up the miles before discovering Hythe. Now he can finish work at his factory in Slough and be on one of the two classic boats berthed next to his home in little more than an hour. His one regret is not splashing out even more: 'I suppose in hindsight I wish we had gone for one of the bigger homes. They cost pounds 160,000 in those days and rose to more than pounds 500,000 in the boom.'

But that might have left him with a sinking feeling that no boat can imitate. There is little worse than learning that your new neighbours picked up their identical home at auction for half the price you thought yours was worth.

(Photograph omitted)