Millions of pounds to tumble from Sussex house prices

6:56am Thursday 24th January 2008

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Experts are warning homeowners to get out of the property market before a massive crash wipes more than £100 million off the value of Sussex homes.

Slowing house prices and mounting worries over sub-prime mortgage lending has led industry bosses to predict that the county's property market will slump in 2008.

Thousands of tenants could also be affected as estate agents go bust, swallowing up legal fees and deposits in the process.

The cracks are already beginning to show with Farrells, the Hove based estate agent, appearing to be the latest casualty of the downturn.

A spokesman for the Estate Agent Ombudsman said: "People are being affected everywhere and estate agents are no different.

"Places like Sussex where there has been a large increase in property prices in the last decade could well be affected more than most.

"If the downturn is as dramatic as many fear then a conservative estimate would be that £100 million would be wiped from the Sussex market within a year."

One source from leading property marketing firm, TeamProp, added: "I'm telling people to get out of the market quickly and diversify their portfolios.

"A crash is going to happen."

House prices across the county have rocketed in the last decade, with hotspots such as Brighton and Hove and Chichester among the places where the highest rises have been recorded.

That sudden rise has left the county vulnerable to equally dramatic falls in values.

And while many experts say large swathes of the county will be badly affected by the slump, some believe the most in demand parts of Sussex will survive any downturn relatively unscathed.

One Mid Sussex estate agent said: "It's not as good as it used to be but it is still a good market. Most of the problem is that the papers keep going on about it and making people nervous."

Any drop in house prices would be a fresh blow for families who already face having to settle for worse deals on their mortgages if their current packages run out this year.

National Homebuyers, the UK's largest home purchase company, has launched a £250 million fund to take advantage of tumbling prices by buying up homes and tempting sellers with quick cash.

Across the country an estimated 45,000 homes will be repossessed in 2008 because owners cannot meet their mortgage repayments.

Julian King, from National Homebuyers, said: "Banks have been lending too much to those who cannot afford it and subsequently ended up struggling to meet extortionate mortgage repayments.

"This year we're on a mission to help people sell the home they can't afford more easily and efficiently than ever before. We're focused on removing as much stress from the process for them as possible.

"The tragedy of people losing their homes because they cannot meet repayments must be avoided. This increases the likelihood of families being broken up because of debt."

Mystery still surrounds the sudden closure of Farrells, the estate agents in Goldstone Villas, which abandoned its offices without warning more than a week ago.

Frantic calls from tenants, landlords and homeowners have all gone unanswered, leaving most connected to the company fearing substantial financial losses.

Even TeamProp, which helps market Farrells' properties and has a close association with the firm, said it was still "in the dark" over what had happened.

A spokesman admitted: "It sounds as thought they've gone under, but we honestly are as much in the dark as anyone else."

Chairman of Brighton and Hove Estate Agent Association, Hugh Tucknott, said he also remained in the dark.

The full effect Farrells' closure will have on customers remains unclear but dozens of its people have contacted The Argus saying they fear they will lose out on thousands of pounds entrusted to the firm.

They include people who have paid out hefty deposits, are in the middle of buying or selling properties and who have forked out estate agent fees.

Some have even said they feel unsafe and have been forced to change their locks because Farrells has copies of their front door keys.

One industry source told The Argus that "some of the mess" could be sorted out fairly easily.

But he added that a lot depended on whether Farrells had made use of deposit protection schemes and had taken out proper insurance policies.

He said: "It could lead to some legal action, which would place further burden on customers.

"If the firm has been through all the protect procedures with deposits, it should be fairly easy and straight forward. But that doesn't stop people quite rightly getting worried."

Bill McClintock, a spokesman for the Estate Agent Ombudsman, added: "If Farrells has done everything by the book, customers should be okay.

"However it's not a nice feeling to be in that situation."

One customer, a tenant, said she was told that Farrells' head of lettings, Gary Vincent, had "gone to work on the trains".

She said: "I called my landlady who said that she had been trying to get in touch with them for two weeks as she had not received January's rental payment and each time she called there was no answer.

"We advised the landlady that we had spoken to Gary about ten days before notifying him of a delay with our rent to be told that he was leaving the firm and going to work for the trains."

Branches of Link Up Properties in Hove and Shoreham have also closed, a company spokeswoman confirmed.

Nobody was available to comment further on the reasons for the closure of the two branches which were both independently run.

The Argus was not able to contact anyone from Farrells.

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