Property: Fortunes for a chosen few: House prices may be rising, but buyers are so fussy that only owners of prime properties can expect to benefit, says Anne Spackman

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The Independent Online
At first glance Ivy Cottage near Rochester in Kent does not strike one as a prime property. It is a small stone cottage with a living room, kitchen, three bedrooms and a bathroom, priced at pounds 60,000.

Yet, when Cluttons put it on the market last month it had 300 inquiries in the first week. It has already turned down offers of more than pounds 100,000 for the cottage, stable block and a piece of extra land, and is now moving to sealed bids. A prime house is not necessarily an expensive one: it is the one all the buyers want.

This is also a classic example of how to sell prime properties. If you can bring yourself to put it on the market for less than you expect to achieve, the buyers will buzz like bees around a honeypot. Several will make offers and the competition will most invariably lead to you getting more than you asked for.

Tim Blenkin of Blenkin & Co in York used the same tactic with Crayke Hall in North Yorkshire. The six-bedroom house sitting in five acres of land with spectacular views needed everything doing to it, from the plumbing to the dry rot. He set the guide price at pounds 225,000, showed 35 people round it, went to best offers and sold it within six weeks for around pounds 250,000.

Sales such as these are bringing 'gazumping' back into the property vocabulary and raising house prices. Quality properties are in such short supply, and demand is so high, that prices are starting to move in all the popular areas. Agents in Kensington, the hottest spot, quietly admit that Savills' prediction of a 25 per cent increase in prime central London properties this year no longer looks absurd.

But before you calculate how much richer you might be by the end of 1994, ask yourself, is yours really a prime property? If the answer is anything other than a straight yes, the price rise does not apply.

Recession has made buyers very fussy. Many who sold at the bottom of the market and moved into rented accommodation are now coming back, and will not pay a penny over the odds for something less than perfect. So the price gap between the good and the rest is widening.

Tim Blenkin had a house very similar to Crayke Hall, but a couple of flaws made it a very different property to sell. Normanby Hill had nine bedrooms and a lovely view across its 13 acres of the Vale of Pickering. Like Crayke Hall it needed a huge amount of work, which put plenty of prospective buyers off. In addition, the neighouring farm had a right of way across a track by the house.

When Mr Blenkin took on the sale, the house had already been on the market for three years, being first priced at pounds 350,000. It sold last year for pounds 155,000.

Location and price remain the key factors in judging a property's value. But a right of way, a shared drive or any kind of busy road are the features most likely to have an impact on a property's desirability. In the current market the impact is often out of all proportion to the flaw.

Cluttons has seen this very starkly when selling three Kent oasthouses of broadly similar size. Crooke Oast, a large four-bedroom house in popular Brenchley near Tunbridge Wells, came on the market last summer with a guide of pounds 325,000, and sold immediately at very near the asking price. Petham Oast, a house of similar size but with less land, near Canterbury, drew two competing buyers with a guide of pounds 250,000 and also sold very well.

But Bevenden Oast in Great Chart near Ashford has been on the market since 1991. The house is an attractive five-bedroom Kentish oast, in good condition, with seven acres of land, and it doesn't lie on the main line to Paris. So why the problem?

Conrad Payne of Cluttons puts it down to two factors. First, people look at the map and say it's right by the A28. In fact, as the agents' details show, its seventh acre is by the A28, but the house itself is at the other end of the plot. Second, the private drive which leads up to its gates is shared by a few other houses.

'People look at the map and simply refuse to go and see it,' Mr Payne said. 'There are a lot of fussy buyers out there.' The house is still for sale with a guide price of pounds 395,000.

Richard Hatch of Carter Jonas in Cambridge had a similar problem with a very pretty Victorian house. It was in one of the city's most popular streets - but on the corner with a very busy road. Not only did it take nine months to sell, but it went for around pounds 25,000 less than it would have done a few doors down. 'The house looked the part,' said Richard Hatch, 'but people are very concerned that a house is in the right setting. Busy roads ruin some of the best houses around Cambridge.'

Real house sales like these show how meaningless surveys of price movements really are. You could at one time have assumed that, if prices in your area had increased by 10 per cent, that applied across the board. Now, while the Halifax says prices have risen by 2 or 3 per cent in February (contradicted by the Nationwide, which notes a tiny fall), the real value of your house is more likely to have stayed still, or jumped higher.

Yolande Barnes of Savills Research, who made the bold 25 per cent prediction, thinks this gap is going to grow. 'There have been six to nine months of severe stock shortages in some areas,' she said. 'Kensington has a wealth of hot applicants, who have sold, have cash and cannot find a property to buy. Parts of Manchester are the same. There is a tangible supply/demand mismatch.'

Yolande Barnes is one of the only analysts who doesn't predict a slow, steady growth in prices this year. 'There is no such thing as the slow turnaround - there never has been,' she says. 'As more and more people say to their friends that they have had to gazump in order to get a house, a kind of folk myth takes over. Once people perceive that prices are rising there will be a cascade effect.'

Miss Barnes thinks it is not only shortage of supply that is fuelling the increase in prices for quality homes. With owner-occupation extending back two or three generations, houses are increasingly being funded by inherited money rather than mortgages. The cash is sucking many buyers into the prime market, increasing competition for good homes.

'We think this is a trend which has not been spotted by most analysts,' she said. 'One-third of owners have no mortgage. We think building societies are producing a distorted picture of the market.'

This is cold comfort for owners sitting at the bottom of the market, watching larger homes move beyond their reach. Although 600,000 families have come out of negative equity over the past year, there are still 1.2 million affected households.

Those properties which have accumulated negative equity are most likely to be of poor quality and in poor locations. Yolande Barnes thinks they will remain very difficult to sell for a long time yet.

Repossessed homes are most likely to end up at auction. The catalogues are full of small flats, normally poor conversions or ex-council properties, often on busy roads.

Simon Ebdon of Halifax Properties in New Cross, south-east London, has put a one-bedroom flat on New Cross Road up for auction. The guide price is pounds 12,000. Such properties are snapped up at rock- bottom prices by developers hungry for new business.

Average price rises may be doubled if you are selling the popular house, and nonexistent if not. The easiest way to stay popular is to prevent a new road being built at the end of your garden. Anti-roads campaigners, take note.

(Photograph omitted)

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