As I look back on the last 25 years in Savills research department at the ripe old age of 50, I am conscious of a 180 degree revolution in the housing market wheel. The contrast between 1989 and 2014 is particularly apparent if I place myself in the, now rather unfashionable, shoes of my 25 year old self. Some things are distinctly different to how they were – but others only appear to be.

The UK housing market boomed in the 1980s and then overheated by Autumn 1988 after frenzied activity following the budget announcement on the ending of dual mortgage tax relief. So I managed to join Savills and become a residential commentator just as the housing market was on the cusp of its most dramatic dive ever.

"The UK housing market boomed in the 1980s and then overheated by Autumn 1988"
Yolande Barnes, Savills Research

At a personal level, I had just sold my first time buyer house in Hampshire - whence I had been banished two years earlier by impossibly expensive London prices (sound familiar?). I was able to take advantage of the slow market to move back into London where I nearly bought a tiny little Mews studio in Highbury - but thought better of it. The same property would now cost eight times the price but, feeling smug as the value of that property plummeted for a couple of years, I rented until 1992 before buying a basement flat with potential in the 
up-and-coming, but not yet prime, area of Notting Hill.

The growth of prime London is a big story of the last two and a half decades. Young Londoners – at least those without trust funds - have always been pushed to the edges, unable to compete with older, equity-rich, prime buyers. They have formed a front line of gentrifiers (Battersea in the 1980s, Wandsworth in the 1990s and Shoreditch in the noughties) and ended up themselves extending the boundaries of prime London. As a 28 year old, I would no longer stand a chance of affording the now ultra-prime Notting Hill - but I would be looking avidly at little Victorian terraces in parts of unfashionable East London.

A momentous year

1989 was a momentous year in more ways than one. The creation of Assured Shorthold Tenancies and the deregulation of rents in the 1989 Housing Act was to begin changing tenure, creating one of the biggest turnarounds of the last 25 years by increasing the supply of rental properties dramatically (a dream for my 25 year old self). But, over the same time period, access to mortgage funding for first time buyers has gradually been choked off as the whole market (not just prime) contains larger amounts of equity – so now it is owner-occupation that is restricted, particularly for the young. Maybe the next 25 years will see the rise of both rental and owned (or part owned) supply, along with freer funding – but I’m not betting on it. A big risk is there will be a counter-movement against landlords in a misguided attempt to address problems which are really caused by undersupply of all types.

Meanwhile, the housing market wheel continues to turn, we are now half a cycle beyond 1989, London has boomed, it is now the turn of the prime country markets and then the regional markets to perform. And yes, I have succumbed in my riper years to the joys of country living – in rural Kent.

Taken from
25 Years of Savills Residential Research (1989 - 2014)