Property: End-of-terrace for just pounds 5,000

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The Independent Online
A YEAR after the mortgage rescue campaign was launched by a rattled government, repossessions continue to pour on to the market, pulling other prices down. They make up most of the list for Allsop's auction of Midlands property at the Birmingham International Conference Centre on 15 February. But falling interest rates mean more buyers are being lured to these sales. Winkworth, which also has a large percentage of repossessions at its 11 February sale in Kensington Town Hall, has been asked for 7,000 catalogues - an average of more than 100 potential bidders per property.

Rock-bottom prices are the main attraction, as lenders try to clear the backlog from their books. More than 87 per cent of Winkworth's guide prices are below pounds 50,000, while Allsop is quoting between pounds 10,000 and pounds 20,000 for a typical three-bed terrace in the Midlands. Some even go below this. A three-bed semi in Hednesford, Staffordshire, and a four-bed end-of-terrace in Ladywood, Birmingham, have been given guides of pounds 5,000.

Both properties are derelict shells, however, a fact many buyers do not realise until they see the brochures. That makes it vital to arrange a mortgage in advance, otherwise you could be left with an unusable wreck. Many lenders are not keen to take on such low-quality property unless the loan is tied to stage payments for renovation. That means builders often step in to grab the bargains.

The supply of repossessions is expected to remain at 60,000 a year until the mid-Nineties, despite falling interest rates.

LIFTING planning controls on the countryside would do little to provide new homes, a recent study claims. Raising building targets by 75 per cent would reduce house prices by an average of 7.5 per cent across the country, bringing them within the means of only 3 or 4 per cent more people, according to Glen Bramley and Will Bartlett at Bristol University School of Advanced Urban Studies.

Even the releasing over the next decade of every acre of land outside green belts and natural beauty areas, an unlikely scenario, would cut prices by less than 9 per cent. A better way of spreading ownership, the study says, would be to force more builders into agreements to provide cheap homes as a price for planning permission to build higher-priced ones. Fewer new homes would be created and these would be more expensive, but more poorer families could be pulled into 'social' homes which they could part-rent.

'Planning, the Market and Private Housebuilding' is available free from the Joseph Rowntree Foundation, 40 Water End, York YO3 6LP.

DON'T expect any sympathy from Eddie George, the new Bank of England supremo, however. His views run closely with those of the outgoing governor, Robin Leigh-Pemberton, who welcomed the decline to 'more realistic' prices. The bank's line was that lenders and ministers should be 'sensitive' to the difficulties of those who were caught out by the boom, but that clamping down even further on inflation was the priority. This would help first-time buyers, stimulate renting and shatter the allure of property as a short-cut to easy wealth. Expect more of the same.

HARD TIMES are also evident at the other end of the spectrum as the prices of some of London's most expensive homes are trimmed. The picturesque Gothick Villa in Regent's Park has been slipped on to the market by Lassmans and Savills for a mere pounds 6.75m. This is the third home created by the classical architect Quinlan Terry for the Crown Estate as a continuation of Nash's aborted plans for more than 50 villas across the park. The first was sold for just over pounds 8m.

Palace Green had even higher hopes of snatching the top spot for the country's most expensive home when launched at the height of the boom. The penthouse, high over Kensington Palace Gardens, was reputed to be worth a couple of Terry's villas. Now Regalian Properties has knocked down the value of the block by an average of close to pounds 1m for each of the 20 flats in an attempt to find a buyer for the lot.