Paul Wilson today in Folkestone where he’s now renting. He bought his first home in north London in 1990
(Picture: Paul Wilson)The television presenter Kirstie Allsopp recently sparked a furious backlash after an interview in which she appeared to claim that today’s first-time buyers could afford to buy a place of their own in their twenties by giving up luxuries like Netflix and gym subscriptions.
Allsopp bought her first home in Battersea in the early Nineties when it’s true that Netflix didn’t even exist.
But was it really easier for first-time buyers then compared to the struggles first-time buyers face now? We talk to three people who bought their first home in the Nineties and Noughties to find out.
1990
Average house price: £79,910
Paul Wilson was investing in real estate for the first time in 1990, at around the same time as Allsopp.
Wilson was working as an estate agent when he and his girlfriend — who is now his ex-wife — paid £63,000 for a studio flat in West Heath Court, a mansion block in Golders Green, north-west London.
The couple had a joint income of about £25,000 to £30,000 and needed a five per cent deposit (just over £3,000).
“It was affordable,” said Wilson. “There was no hard or heavy saving needed. We had no kids at the time, so most of our income was disposable. But once we had the place we had to cut back. Mortgage payments, ground rent and building maintenance drastically reduced our disposable income.”
The couple opted for an endowment mortgage which meant they only paid interest on their loan. This kept monthly costs manageable, although not rock bottom since the Bank of England base rate in 1990 was a painful 13.875 per cent.
Endowment mortgages are no longer an option for first-time buyers, and with good reason. They relied on the premise that property prices would keep on rising, meaning there would be enough money to pay off the debt when the time comes to sell.
But if prices failed to perform, as they did throughout the 1990s, then owners could be trapped in their homes.
Luckily for Wilson, he didn’t quite fall into this trap. By 1995, the couple wanted to upsize and were able to sell the flat for £63,000 — with buying and selling costs this meant they lost money on the sale.
They moved to Maidstone where they bought a three-bedroom end-of-terrace for £160,000, again using an endowment mortgage. The couple raised their three sons at the house but divorced in 2012 and Wilson, 61, agreed that his wife keep the house.
He now rents a flat in Folkestone where he has set up his own hypnotherapy and mindset coaching company, A Happy Head.
“At my age it is impossible to get a mortgage to buy anywhere,” he says.
With the wisdom of hindsight Wilson realises he and his ex made a mistake with that first buy.
While they loved the property and its location, he says the freeholder was a notorious overcharger and they ended up spending a fortune on maintenance costs, an issue which also made it hard to sell on.
And, of course, Britain was in recession in the early Nineties so they didn’t see the kind of price rises that those who had bought in the booming Eighties had enjoyed.
“Our timing was bad, but we didn’t know that at the time,” he says.
2000
Average house price: £130,400
Polly Arrowsmith teamed up with her sister to buy her first house at the age of 29.
After a stint travelling, she had moved to London and got a well-paid job as financial controller at Jim Henson’s Creature Shop in Camden Town — “I love telling people I was headhunted by the muppets” — and her living costs were minimal.
“We had been offered a really cheap deal to rent the top floor of a house in Tottenham,” says Arrowsmith, now 54. “It was a bit odd — we shared a bathroom with the couple who owned the house and there was only one bedroom so one of us slept in our sitting room. But we were only paying £25 a week.”
In addition to cheap rent, the sisters were earning good salaries — about £35,000 each, which meant they were able to build up savings.
In 2000, they paid £170,000 for a three-bedroom terraced house on Greyhound Road in Tottenham.
“We had missed the [late Nineties] property boom, prices had doubled the year before, but I realise that it still sounds ridiculously cheap now,” says Arrowsmith.
The sisters were able to put down a £15,000 deposit for the house and Arrowsmith still has the paperwork showing that the monthly cost of their Abbey National Building Society (bought out by Santander in 2004) repayment mortgage came in at a grand total of £224 a month.
“We could have extended ourselves more,” says Arrowsmith. “But we chose to buy in Tottenham as we expected excellent capital growth [although] it did take longer than we expected.”
There were also lifestyle compromises to be made. Back in those days, Tottenham was less salubrious than it is today. Both sisters recall being mistaken for prostitutes while walking home, and there wasn’t much to do in the way of restaurants or cafes.
They lived in the house until 2007. Arrowsmith’s sister then moved to Leeds and Arrowsmith needed a place of her own.
They decided to hang on to the house, which by then was valued at £425,000 following a £60,000 renovation, and rent it out. To release some money for a deposit, Arrowsmith remortgaged it.
With a £100,000 deposit, and an interest-only mortgage of six or seven times her salary, Arrowsmith bought a £945,000, three-bedroom townhouse in Barnsbury, Islington. She was given this massive sum by Northern Rock, the lender with a dangerous habit of offering huge loans to buyers. It had to be nationalised in 2008.
Although the value of her house has fluctuated in the years that followed, Arrowsmith — who is now a director of marketing — said it never fell below the £945,000 she paid for it. Today it is worth about £1.6 million.
“I am an accountant by trade and I have always studied the market,” she said. “We seem to get a boom every 10 years or so and so I wasn’t worried about the house losing money, not in the long term.”
2010
Average house price: £279,700
Aimee Higgins never planned to become a home-owner. Instead, it was thrust upon her.
In her mid-twenties, Higgins was sharing a flat with friends in Clapham and was far more interested in building her career with a blue chip accountancy firm than in investing in bricks and mortar. Then the phone rang.
“The bank called me just out of the blue, I didn’t initiate it, and said you should be thinking about buying a property,” says Higgins, now 39. “I said, ‘That’s great, but I don’t have any savings.’ And they told me not to worry about that, they’d give me a loan for a deposit and anything else I might need.”
Higgins was earning £45,000 at the time and, despite her lack of savings, was able to buy a one-bedroom apartment in Bromley for just over £200,000. Her deposit and moving costs were covered by a bank loan of about £20,000 and she was given a 95 per cent interest-only mortgage by NatWest.
Buying a property amidst a global recession could, of course, have gone terribly wrong for Higgins.
“I had no financial buffer at all, it was a huge risk,” she says.
But her mortgage being interest only did keep her monthly costs low and when, in 2016, she started thinking about moving on, the flat had gone up in value enough for her to sell it for £275,000.
She paid off the original loan and walked away with about £70,000.
“I was incredibly lucky,” she says. “In hindsight it was a terrifying thing to do.”
Higgins’s new home is a modern three-bedroom detached house in Ashford close to her family.
It cost £320,000 and this time she has gone for a much safer repayment mortgage whilst simultaneously setting up her own company, Couch to Carbon Zero, a non-profit promoting sustainable lifestyle changes.
“I do really feel for today’s generation,” she says. “My poor niece has been saving up for years and years for a deposit, and I feel really shady because I didn’t do anything smart — I just picked up the phone.”
How buying in London has changed over 30 years
1990: The average price of a home in London is £84,000 (Source: ONS)
1991: Rising interest rates, introduced to curb inflation, trigger a two-year recession and falling house prices across the UK, followed by several years of strong house-price growth
1996: Buy-to-let mortgages are introduced sparking a new generation of small-fry landlords
1997: According to Nationwide the average London home costs four times the average income in the capital
2000: The average price of a home in London hits £164,000 (Source: ONS)
2008: Lehman Brothers crashes into bankruptcy — the biggest corporate failure in history — leading to a global recession
2010: The average price of a home in London hits £385,000 (Source: ONS)
2011: Overseas buyers bolster a revival of property prices in Prime Central London. The phrase “generation rent” is coined to describe young buyers permanently priced out of the property market
2014: Mortgage Market Review curbs levels of borrowing available to house buyers. Stamp duty is increased, particularly for more expensive homes and those sold to overseas buyers
2016: Stamp duty rates are increased again; the Brexit referendum triggers a slowdown in property sales across the UK. The average deposit on first homes in London hits morethan £100,000
2020: Britain officially leaves the EU; weeks later the pandemic begins. Buyers react by flocking to the suburbs and beyond. London’s house-price growth falls behind the rest of the UK
2022: London house prices hit an average £521,146 — or 11 times the average salary in the capital
