My financial mistake Leaving the London property scene for a rural paradise proved to be a costly romance for one couple, who lost out on £200,000.
It was no capital move
I never wanted to leave London in the first place. If it wasn't for my Norwegian girlfriend, who detested the capital, I'd still be living there now. I never wanted to sell our three-bedroom terraced house, either. But I did, and it turned out to be my worst financial mistake thus far.
Indeed, it cost me £200,000. Ingrid, my partner, moved from Oslo to live with me in Lewisham, south-east London, in 1999. But she failed to land a job she liked, and couldn't get accustomed to the crowds and the noise. But she fell in love with the English countryside, and spent the next few years agitating for a move. "It's so romantic, we'd be really happy there," she said. As a freelance journalist working from home, moving to the countryside was feasible. I often boasted that I could work anywhere with a broadband connection, and that boast came back to haunt me.
As Ingrid regularly reminded me, I also liked the countryside, and it's true. I love Sunday lunch in a country pub, or roaming the Kentish apple orchards at harvest time or high-tailing it to a pretty coastal village. I was even happy swimming in the North Sea. The countryside, it turns out, is great for the occasional weekend, but living there is a different thing entirely. Still, Ingrid wore me down, and in November 2003 we put our property on the market for £320,000 (Dh1,913,176 million), which seemed like a ridiculous sum at the time. As a financial journalist, I kidded myself that I knew what I was doing.
"Prices can't keep rising forever, the bubble has to burst," I told myself. "We can rent for a year, and when the crash comes, pick up a bargain property as a cash buyer." I quietly assured myself that a year of country living would puncture Ingrid's rural idyll, and she would be begging to come back to filthy old London. We sold the house in two days, to the second couple who walked through the door. That worried me a little, but not too much. The economy was looking shaky, and I was expecting a major downturn. Unfortunately, the Bank of England responded by slashing interest rates, and London house prices instead went crazy, rising at a stupifying rate.
I spent the next two years paying rent in bucolic coastal Suffolk and watching my cunning scheme fall to pieces. House prices kept rising, we kept shelling out rent. Ingrid's dream of running a bed and breakfast drifted further out of reach, as we could barely afford a place big enough for ourselves and our young daughter, Molly, let alone with another four bedrooms for guests. One day I received an e-mail from a former neighbour linking to the website of a local estate agent. Our property was on the market again, for £575,000. That was more than £255,000 we had sold it for.
I gained some comfort from the fact that the buyers had spent a bit of money on the property, installing new windows and converting the loft into a fourth bedroom. That must have cost them around £50,000. But however I massaged the figures, I was still down to the tune of £200,000. We could never return to London, unless we wanted to move into an inferior property in a dodgy area. Even the credit crunch didn't save me. I hoped that would slash 30 per cent or 40 per cent off London properties, belatedly justifying my decision to sell. But after a slight dip they stabilised, and have risen steadily this year. When I now search on London property websites, I see run-down houses on busy arterial routes in the same area for prices I now can't afford.
I've learned that you should never try to time the market, whether it be housing or share prices. Nobody knows what is going to happen next, as there are simply too many economic variables, and the experts get it wrong as often as the amateurs. A little knowledge, as the saying goes, is a dangerous thing. Hopping voluntarily out of a housing market hotspot such as London is also a foolhardy strategy. You might get lucky, but you have to set this against the greater danger of prices soaring far beyond your pocket, forcing you back to the bottom of the property ladder.
That is what happened to me. It is much safer to take the ups and downs of the market with everybody else. We never did buy that bed and breakfast, or return to London. Three years ago we bought an apartment in Oslo, where prices were a bit more affordable (this was in the days when sterling was still worth something). We recouped some of our losses by doing up the apartment, then lost it all again after Ingrid spotted a pretty white wooden house right on the fjord and uttered those dreaded words: "It's so romantic."
It was so romantic that we bought it without first checking the basement for signs of damp, rotten and crumbling beams, drainage problems and rat colonies. And that's the final lesson I've learned. If you want to survive big property decisions, keep romance out of it.