Property: Why the price is not right

HOME owners desperately waiting for price rises to indicate a revival in the market are watching the wrong target. They should be counting potential buyers - and realising that falling values do not necessarily mean that the market is static.

Agents who have been working hard since before Christmas saw their hopes of some spare time disappear with the latest cut in interest rates. Inquiries doubled in more than half the 30 Winkworth offices across London. In Shepherd's Bush, they tripled. But despite the renewed interest, prices have fallen: many owners who took their homes off the market six months ago are bringing them back at lower values, Ian Dickson, the local manager, says.

This activity has taken place across the country. In 4,500 offices covered by the Estate Agent Ombudsman, sales in December increased by up to 18 per cent over the same period a year earlier.

But turning inquiries into sales is not always so easy, and some owners are not helping. Simon Agace of Winkworth says some owners have foolishly pulled out of deals this week, expecting lower interest rates to harden prices. They should realise that any buyer is better than none, and take note of pessimists such as Jimmy Adams.

His Adams Residential Property Index predicts that in 1993, even fewer homes will be sold than in 1992. Interest rate cuts during the past two years have not halted the slide in sales, he says.

PERHAPS the public cannot be blamed for concentrating on prices when many expert observers still see them as a crucial guide. 'There are few signs that the housing market is on the point of picking up,' the London Research Centre says in its bulletin covering the final three months of 1992.

This claim is based on the fact that while prices revealed in Halifax Building Society loans rose in seven of the city's boroughs, none has enjoyed a sustained increase over six months. But that reveals nothing about the recent revival of deals among first-time buyers. The LRC looks at the fall in prices - 1 per cent between October and December - and concludes that there must be fewer first-time buyers around.

Whatever the truth may be, first-time buyers are certainly reaping some bargains. The cheapest London flats are now pounds 20,000 cheaper than at the height of the property boom in 1988. Smaller properties in boroughs such as Merton and Newham are as much as a fifth cheaper than a year ago, while across the whole city, prices are 10 per cent lower.

YOU MIGHT think that buying a home on the site of the last treadmill in the country would provide an inkling of what to expect. Add the fact that it also once boasted the 'coldest bath in London' and the writing must surely have been plastered across newly built walls.

Sure enough, values have plunged icily on the aptly named Coldbath development in Islington, north London. Flats once worth pounds 120,000 to pounds 140,000 are now on the market for as much as a quarter less. But the old adage of location being the prime attraction for buyers means two dozen professionals remain happily settled a stone's throw from offices in the City. Only three are left at the lower prices. The banks who backed the scheme have also emerged unscathed. 'I'm the one who has taken a cold bath,' Peter Mills, the architect/builder, says.

LET NO ONE say the market in Tunbridge Wells, Kent, is in the grave. Seven buyers queued to snap up a Gothic Victorian lodge, which was sold within six weeks of being put on the market by the local council. Despite needing a good deal of renovation, it achieved close to the guide price of pounds 78,000, David Parry, of agents Hurley Lloyd Thorpe, says.

Perhaps this was due to the tranquil setting in what might be considered the dead centre of the market. Lower Cemetery Lodge, on Bayham Road, guards the entrance to what must be the quietest neighbourhood in town.