The difference between could happen and could have happened is simple. Could happen is used when something actually had happened in the past.. On the other hand, could have happened is used when something didn't happen however might have happened..

In the following line,

They looked shocked, as if not believing that all of this could happen to them. I could not help remembering what fine houses and mansions had once been there,and............

As of what I understand, something happened and 'they' are shocked and can't believe that what has happened to them..

As of your other example,

Later in the evening small groups of older folk wandered around not quite believing that this could have happened in their own town

Something didn't happen in that town and the folks can't believe that how that thing couldn't happen in their town..

So, to conclude, in your first sentence, 'could happen' and 'could have happened' both can be used, depending upon the situation..