Bettesworths, the Devon-based agent, has reported that 2002 was its best year ever for pub sales in its 60-year history.
It was involved in over 100 sales and the average price of a freehold freehouse rose to £434,000.
Bettesworths says that, while operators on the high street are facing financial problems because of the high rents, the freehold and leasehold market in the South West is flourishing and prices are rising.
Barney Bettesworth (pictured), director of Bettesworths, said: "The increase has, to some extent, been fuelled by the national rise in house prices which has given prospective purchasers more equity to put into a purchase. This, plus the continuing low level of interest rates and an abundant availability of mortgage finance, have been major factors."
But Bettesworths believes that demand will fall in 2003 and any licensees who are thinking of selling should move quickly.
Mr Bettesworth said: "It is unlikely the heat in the market will continue but, despite some clouds on the horizon, as long as interest rates remain low and stable, it is unlikely that the market will fall."
The price of second-hand leasehold pubs has been affected by the large number of leases made available through the larger operators such as Punch and Enterprise. This has meant that they have had to be more realistically priced for potential buyers, says Bettesworths. The average price of a lease through Bettesworths in 2002 was just over £50,000 with the majority of the deals being 20-year leases with a beer tie.