Freehold pub prices fall by 20 per cent

Freehold pub prices have plunged by over 20 per cent this year to an average of £537,000 with a further price fall predicted for next year, according to the Fleurets annual price survey.

The survey, which reports on all pubs sold by the agent in the 12 months to September 30 as well as those currently on the market, also found that the price of a leasehold pub has dropped from 28 per cent of turnover two years ago to 20 per cent this year.

Fleurets chairman Barry Gilham said: "We are still selling at the same rate as last year at about two properties a day but there are more properties on the market, largely due to the pubcos curtailing their acquisitions.

"There will be a substantial fall in prices in 2009, as we're asking lower prices now than we achieved last year."

Gilham added that the number of freehold freehouses on the market is at its highest level in a number of years, which would contribute their decline in price. There are over 100 currently on Fleurets' books.

The price of bottom end freeholds, those without accounts, has also fallen by 10 per cent over the last two years. However these pubs, most of which were closed and vandalised are now dominating the market. They represented 34 per cent of the agent's pub sales this year, with that number set to rise.

This year in the South region, they achieved sale prices £70,000 higher than freeholds in the same area, at an average of £479,000.

This was largely due to high land values and the value of converting the buildings into housing or alternative businesses.

Their prices are likely to fall next year to an average of £233,000, down 27 per cent on 2006 prices.

London and the Home Counties remain the most expensive areas to buy, whereas the cheapest part of the UK is the Midlands, Gillham said.