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| Work well underway on our two-up-two-down terrace. I fitted a gate to the side passageway which is still there today! |
So we know what it’s like to be a first time buyer in 2013, but what was it like to be a first time buyer in 1988?
Why does Jonathan Waters of Jonathan Waters Estate Agents with two offices in Ipswich and an office in Martlesham Heath, think he is so qualified to tell you about this topic?
Well, the reason is simple - he was one a first time buyer and an estate agent in Ipswich 25 years ago.
Jonathan takes up the story:
“I was a first time buyer in the spring of 1988 in Ipswich. The estate agency scene back then looked quite different from what it does now. Many of the estate agents in existence then that were in Ipswich in the 1980’s are no longer around today. There are a lot of estate agents today who weren’t in existence at the time (ours included) and of those which were about then, many are now in different locations within the Ipswich area.”
“I got into the estate agency business early in 1988 and my then boss at the time, Anne Hazelwood, who still works for Jonathan Waters Estate Agents today, advised that I should get on the housing ladder quickly because prices were rocketing.”
“They were indeed. I had started in February and prices were going up on an almost weekly basis. Then a property at £100,000 would sell one week, the next a similar property on our books would sell at £105,000. House price inflation really was raging that fast.”
“Understandably, only having been in the estate agency business a number of weeks, I was still rather naive about the whole process. So green, in fact, and I tell this story often, that when we were searching for a mortgage I kept seeing in building society windows interest rates quoted at two different amounts. These amounts were shown as one percentage with a second figure in brackets that was higher with the letters APR. As this was March I thought that the APR meant April and that we needed to get our mortgage organised quickly because the percentage rates in April were going up. That is literally how inexperienced we were!”
“Anne Hazelwood advised me on the Monday morning of one week and by the Monday evening we had purchased a house. Even today, 25 years on, she still talks about that being the quickest anybody has acted upon her advice in all those years as an estate agent in Ipswich.”
“A property came on the market in Cowell Street, a little cul-de-sac backing onto the docks area, just off the Wherstead Road. An elderly lady was going into sheltered accommodation and not a lot of work had been done on the property for some time. The property was priced at £44,995, for the tiniest of a two bedroom end terrace. This house had no front garden and went right onto the street, and the front door went straight into the lounge. There were two tiny reception rooms, a small narrow kitchen and a downstairs bathroom in a flat roofed, single storey extension. A central staircase led to a bedroom either side, to the front and back upstairs, and needless to say it just had on street car parking.”
“When got there in the early evening, a couple who wanted the property had just left. And, as we were leaving, the next couple had turned up and were waiting on the pavement, in case we didn’t want it.”
“I offered full price to the lady there and then – something which is practically unheard of today, but absolutely essential back in 1988. By waiting for a second viewing you had lost the property”.
“We were fully aware that if we didn’t get this, the next similar one that came on the market would be at least £1,000 if not £2,000, more and we didn’t mess around.”
“Mortgage lending was completely different in those days to that which it is now.”
“I had been with Lloyds Bank since I left school 8 years previously and had a very good credit and savings history. A quick half an hour visit to the local branch of the bank meant that we were given the mortgage go ahead there and then despite the fact I had only been in my new position for less than two months and that it was a low salary, high commission ratioed pay structure.”
“The survey was carried out quickly and the whole transaction was wrapped up within 2 – 3 months – probably a similar length of time to that which it would be today. There were no Energy Performance Certificates in those days.”
“A quick June 2013 look at current mortgage interest rates show that you could get as low as 2.44% for a five year fixed rate, possibly even lower. Within six months our mortgage interest rate had risen to 15%!”
“For those of you reading this, who are old enough to remember, our dear friend Nigel Lawson, Chancellor of the Excheqour, panicking on interest rates and I believe from memory they actually went up 5% in one afternoon.”
Why was the housing market in Ipswich so frantic at that time?
“Back in those days as a buyer you could obtain tax relief on the interest on your mortgage payments. If you were buying as a couple, both individuals could benefit from that tax relief.”So what happened in August?
“In the budget of March 1988 the Government announced the scrapping of this double tax relief. However, they did an interesting thing – they didn’t scrap it there and then, they set a date for August that year for it to be effective. After that date it would be much more expensive mortgage wise to purchase a property. It doesn’t take a genius to realise what happened. Every first time buyer in the UK, not just in Ipswich, frantically tried to buy a property to get in before the August deadline and the market literally went berserk. Even people who hadn’t thought of buying at the time did so for no other reason than they were worried about where property prices were going to end.”
“I remember working for a corporate estate agents in Ipswich at the time, the one that I started my career in, and at one point in July of that year we nearly ran out of properties to sell.”
“It was not unknown particularly for cheap, first time buyers properties such as the one I bought, to have a queue on the pavement of people wanting to buy it. Offers less than the asking price were virtually unknown.”
“By the arrival of the date in August anyone who was anyone who had even remotely thought about buying a house in the near future had either purchased it or given up due to the fact they were going to miss the deadline. The Government panicked about interest rates and mortgages rocketed to 15%. No one else bought a house and prices crashed.”So, would I prefer to be a first time buyer now or then?
“From the early summer when we moved into the terraced house in Cowell Street to late 1989 we worked tirelessly and continuously on doing up the house and spent about £5,000.”
“When we came to sell the house in the early spring of 1991, some three years after agreeing to buy it, we sold the house at £38,000. We were lucky. How’s that? You may ask – you’ve lost £7,000 on the asking price plus the £5,000 on doing the property up – you must have been over £12,000 out of pocket?”
“We were, but prices continued to plummet after that point, and at the actual depths of the market (I think at some point in 1993) I saw one of our neighbours selling at just £28,000.”
“History will show that prices took a lot of the 1990s to start to recover and it wasn’t until the second half of the 1990s that prices started to look up.”
“I do occasionally pop down Cowell Street to have a look at the old house to see what it’s like now. A couple of months ago I cycled down there to note that our former next door neighbour’s house was up for sale and I thought it would be an interesting comparison to see what our house would have sold for now. Their house was on the market for £104,000.”
“It’s now more difficult to get a mortgage. Credit checks are much more thorough and the size of deposit that you need is much higher than in 1988.”Estate Agents Ipswich – To get on the property ladder contact Jonathan Waters Estate Agents today:
“However, with interest rates at record low levels and things starting to improve in the mortgage market, there is no question that I’d prefer to be a first time buyer now than in 1988.”
625 Foxhall Road, Ipswich, Suffolk, IP3 8ND
01473 721133
jonathan@waters-ips.co.uk
35 Buttermarket, Ipswich, Suffolk, IP1 1BH
01473 281188
jonathanwaters@jonathanwaters.co.uk
Bristol Court, Betts Avenue, Martlesham Heath Business Park, Martlesham IP5 3RY
01473 620222
jonathan@waters-ips.co.uk
or visit www.jonathanwaters.co.uk
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