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A year ago this week, I began paying off the biggest debt I've ever had. I'd borrowed five and a half times my salary over 30 years to buy the small terrace house in North London I now share with my partner.
Back then, a whole 12 months ago, I felt lucky. Our house had been on the market for only two hours when 10 couples bid for it. Somehow we scraped in ahead of them. And even though the price was astronomical - nearly £200,000 more than friends had paid for one round the corner 18 months earlier - I was grateful to my mortgage broker for bagging me the deal he did.
What a difference a year makes. High-risk mortgage packages like mine are history and new loans are down 70 per cent. The London property market's slumped, too, by about 10 per cent according to the most realistic estimates and yesterday the warnings were of a further 17 per cent fall in the value of our homes. The outlook could hardly be bleaker. Yet here's the funny thing: I still feel lucky. And not just because I love the house that cost me my shirt (and trousers) to buy. There are concrete reasons for my optimism.
For one thing, my home's value hasn't yet declined. Despite a year of ferociously negative hype, a lesser house in my street has just sold for more than we paid - even though they had to slash the asking price by £50,000 to tempt a buyer. The slump is real but we are still ahead.
And thanks to the recession, I'm paying back £300 a month less to Alliance and Leicester. My tracker mortgage follows the interest rate - when it falls, so does my repayment. Now trackers-have all but vanished and mortgages are costing around a grand more to take out. I'd never be able to afford my own house now.
Of course, they say the worst is yet to come. But I've done my sums. If the doomsayers are correct and I end up with a property worth £50,000 less than I paid for it, I still break even, because my only alternative was to continue renting.
That would have meant forking out the same amount for a smaller house with a dank basement, gloomy garden and a dangerously wonky boiler. Ask any Londoner struggling to get a foot on the property ladder - that's money down the toilet. So, in the worst case, I'll have lost no more money and gained a lot more quality of life.
The pessimists will call me crazy but as far as I'm concerned, my money's as safe as houses.
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Reader views (28)
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Rather than asking people who agree with you, why not look at some of the new tools that show just how much prices are falling. Try property snake and property bee - you'll get a different perspective.
- Rob H, London
Could have been worse. You could have bought a house in Australia where entry level homes are 6 x income and family homes are 10 x income.
Just as an aside Charlotte - Last year you said you beat 4 couples to the sale. This article you say you beat 10. Next year will it be 16?
- Tim Stower, Adelaide, Australia
You're right!
I don't own a house. But then - nor do you for a long, long time yet. I really miss not being a slave to a bank for a large part of my life. Because I miss the 'security' of that. I'm devastated that, because of the money I've not paid to a bank (I've 'SAVED' quaint olde term), I now can choose to work or not. I'm gutted I shall be taking two months to travel from California to Washington on a motorbike in the autumn, then wintering somewhere warm and cheap. Just think of all that 'dead money' I'll be spending renting my way around the world. Crumbs.
I'd much rather be dodging the drug dealers on my way home from my miserable job in London, safe in the knowledge I've bankrupted myself to get that Starbucks life, shopping for my pentapetdides with my vacuous friends ('Oh my GOD!')on a Saturday.
But then we choose our path eh, Charlotte. Shame yours is a a one of dull conformity, lived out to please your parents and do exactly what everyone else does.
- Md, Milton Keynes
