Windfall stress: it's the new epidemic in town

If you sell up, should you move up - or drop out? Emma Cook on a very Nineties dilemma
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Indy Lifestyle Online
Forget the National Lottery for immediate fantasy escapism. In 1997 the property market is a far more potent creator of wild pipe dreams. Ask your local valuer to drop in - probably the most invited guest in town, especially in London - and suddenly life is rich with opportunity.

Peter, 33 and a graphic designer, describes how his one-bedroom flat in Islington soared in value from pounds 90,000 to pounds 150,000. "The first thing I did after the valuer came round was to sit down and write a list of things I could do to change my life - go to Thailand, buy a flash car, pay off my Access card and move out of London were the first things to cross my mind," he says.

Yet, in just a few weeks Peter has sped the distance from joyful amazement to mounting frustration. "One wacky idea was to buy a run-down Victorian cottage in the countryside and commute in," he says. But he soon discovered that most of the properties within 100 miles of London have also gone up. "I could deck out the bathroom in gold plate and make the place as beautiful as possible, but I can't actually buy anything better," he says ruefully. "Yet there's a psychological pressure to sell - a feeling that this cannot last forever."

He describes his situation as "double-edged" - there's a genuine rush of excitement as well as a fear that this potential windfall could easily slip through his hands. "It's awful to be offered, in theory, the chance to solve all your financial problems but somehow make the wrong decision," he says. "It's dangling under your nose but really, you feel, it ain't there."

The distinguishing feature of this mini-boom, as compared with its Eighties equivalent, is that this time around a sense of anxiety follows quick on the heels of any initial elation. You might call it windfall stress. First, the thirtysomething property owner feels blessed by chance, then, almost immediately, there's a realisation that the windfall may escape them altogether.

On the one hand, the Eighties boom is rapidly coming full circle; prices have risen by three-quarters since 1993. Ridiculous stories are starting to hit the headlines; this week a wardrobe-sized des res in Bayswater, west London, changed hands for pounds 42,500 - almost pounds 550 per square foot. Agents report that garages are selling for up to pounds 100,000. London estate agent Savill's reckons the cost of a pounds 300,000 flat can be increasing by up to pounds 200 a day.

On the other hand, a uniquely Nineties attitude is evident and the "boom mentality" is in far from full swing. Thousands of property owners around the capital are speculating on their future opened wide by valuers' dizzying pronouncements. Yet rather than breaking open the Bolly or racing to put a deposit down on a gleaming penthouse in Docklands, they are feeling under pressure from a situation that could potentially change their lives, terrified they may make the wrong decision. "It's like being told you've just won the pools," says Katie, 33 and a charity worker. "Then you realise there's a catch. My anxiety is, `Should I sell now or wait until next year?'"

Katie and her partner Rob, 34, were "jaw-droppingly amazed" when a valuer took a peek around their pounds 70,000 two-bed garden flat in Clapham North and told them it was worth pounds 120,000. "To be honest, we've always thought it was rather pokey - I can't really imagine who'd buy it for that much," says Rob doubtfully. "I still can't quite believe what we've been told." Katie can, though, and she has quickly entered dreamland territory. "I was really unhappy in my job for a while and was fantasising constantly about what we could do with the profit," she says.

Katie says that her first thoughts were of downsizing but since then, she admits with some shame, avarice has crept in. "Plan one was to get a small house in a picturesque northern village, freelance, downshift and enjoy a better quality of life. But then my imagination seized on plan two. We could rent out our flat for more than our mortgage repayments and then get a second mortgage. I suppose I began to get greedy."

When Eleanor, 34 and a solicitor, discovered what price her neighbour's flat was on the market for, she got in touch with a valuer immediately. Now, like Katie, she and her partner are dreaming about what to do with their pounds 40,000 profit. "I've been thinking of a cottage in the countryside, getting a smaller mortgage and working less," she says. Even their local newsagent is downsizing, renting out part of his shop as a flat, making more money and living off the rent.

In reality, both Katie and Eleanor are unlikely to sell up just yet. Yet they're aware that, unless they do, their pounds 50,00 profit is academic. They couldn't upgrade that easily because everyone else's property is worth more as well. They are caught in a limbo - amazed by such increases but unsure of what they really want to do next. Katie says that they probably won't act on any of their impulses: "The main thing is that I no longer feel trapped by my job or our mortgage."

Among many of the owners I spoke to, a new sense of caution prevails, together with a surprising reluctance to carry on up the property ladder. Trevor Jellis, psychologist and director of a Harley Street stress clinic, believes this is partly to do with the current outlook, as well as a general increase in levels of stress being experienced by most people. "Like divorce and moving house, where and when you buy is a critical decision point. But there is a lot more to lose now than in the Eighties," he explains. "Then the attitude was cavalier. Now it seems more puritanical, people are extremely cautious. They don't want to lose out in any way - they are much more afraid of getting their fingers burnt financially."

Yet the fantasies expressed by so many of them reflect a flight from materialism rather than a desperate desire to buy into it. Jacob Papineau, manager of estate agents Stickley and Kent in Camden, north London, mentions various clients who are employing their profit in more imaginative ways; some are opting for smaller mortgages in or outside London and living off the surplus, another is moving to France to work on a property. Papineau explains: "People's shopping lists are changing - they're having to save money for other things like pensions, private health and education. They're less eager than they were in the Eighties to do `better' - people are more thoughtful about what they really need." They're also far more discreet about the sums they're sitting on. Partly out of nagging fear that it can't really be true, but also because, this time around, bragging smugly about telephone number profits is frowned upon. At least two couples I spoke to refused to be interviewed for fear readers would think they were boasting.

"We tend to play it down with friends," says Sally, 35 and a part-time lecturer. "We just say the valuer must have got it wrong. It's something we prefer to discuss with each other." She and her husband Neil were recently told that their two-bedroom maisonette in Islington, worth pounds 111,000 six years ago, now hovers tantalisingly around the quarter of a million mark. "I thought he couldn't be serious," she says. "Yet it's amazing how quickly you get used to the idea. You start mentally playing around with the possibilities, the idea of leaving London, opting for a less frantic lifestyle." They plan to move to the Midlands, change jobs and buy a much bigger house. Now they face the risky game of deciding when to sell. "We're so aware this is a watershed time. It has so many ramifications to do with the kind of life we want in the future; if we get it right and make the right move we stand to make our dream come true, yet it's a terrific gamble."

Which is why so many other flat owners, stung by the memory of recession, are quite content to let their dream of a radical lifestyle change remain just that for the time being. They would prefer not to take the risk. As Katie says, "At the moment, we're sitting back waiting to see if prices go up any further. There's no rush and you can't get gazumped on a fantasy."

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