The other lottery

Not everyone was caught by negative equity. Rosalind Russell charts price rises from 1959

IT LOOKED pretty sophisticated in 1959. Lots of plate glass, integral garage, 20ft sitting room. The last word in man-about-town chic. The small mews development on the Hyde Park Estate near Marble Arch was completed on the eve of the swinging Sixties. Cliff Richard had a hit with "Livin' Doll" and the M1 motorway opened. The first people to move in paid pounds 7,000 for the three-bedroomed house. If they'd bought a new MG sports car to put in their garage, it would have cost them pounds 534. By the time stockbroker David Mitchell bought the house in 1971, the price of the mews house had risen to pounds 22,000. The latest MG was a racy pounds 992. Britain had adopted decimal currency and the appalling "Chirpy Chirpy Cheep Cheep" was at the top of the charts for five weeks.

"I was living in a flat around the corner when I saw the house," David says. "I had it painted, but that was all. I didn't do anything else. I was a bachelor then." After six happy years, David decided he needed a room with a view. He sold the house for pounds 47,500, making a comfortable profit of pounds 25,500 (excluding any allowance for inflation) and moved into a penthouse overlooking Hyde Park. There was "Anarchy in the UK", Red Rum won the Grand National for the third time and my pokey little one- bedroom flat in Camden Town was worth about pounds 15,000.

And then something remarkable happened. In 1983, according to the Halifax Building Society's statistics, prices began to rise sharply. By 1986, they were going up in a straight line. Over four years, my flat (by now a two-bedroom in a less manic bit of NW1) "earned" more per year than I did. In 1986, David Mitchell decided he'd had enough of his penthouse, freeholders who wouldn't tackle repairs and uncertain maintenance charges. He also had a wife, Isobel, who shared his passion for fast cars. So he went house-hunting. There wasn't a great deal on the market around Hyde Park. But the agent did have a three-bedroom mews house.

"It is rather dark," warned the agent. "I know," David said, "I lived in it for six years." And he bought it back for exactly 10 times what he paid for it the first time round - pounds 220,000. "For three bedrooms and a garage, and being near Hyde Park," he says, "it still seemed terribly cheap. I needed the garage, and I rent the one next door, as I have two Ferraris." (David has also bought and sold one of the Ferraris twice, having regretted the first sale.)

"Since I had last lived in the house," David says, "the kitchen had been changed to a depressing dark green, so my wife had a white one put in. And we replaced the bathroom. Those cost pounds 7,000 and pounds 8,000 each. We recently bought the freehold, which cost us pounds 22,000."

David has now retired, and with a seven-year-old son, the couple have decided to leave London. They have bought a five-bedroomed thatched house in Northamptonshire, convenient for Silverstone and with garaging for four cars. They still retain their home in the south of France, where the neighbours include Tina Turner and Andrew Lloyd Webber. "When I worked out the ratio of growth, I found it was always the magic figure of 10 per cent," says David, quietly satisfied with his rate of return. The mews house is now back on the market - at pounds 275,000. For the third time, Chestertons is handling the sale. And a new MG to put in the garage will set you back pounds 16,000.

For thousands of people, the home ownership game has been a profitable one, even allowing for inflation. As long as you weren't panicked into buying before Nigel Lawson's August 1988 deadline - when dual tax relief on mortgage interest was abolished - or afterwards up until 1990, the game is still worth the candle. It may not seem that way to those labouring under negative equity, or trying to sell in a moribund market. But the people who bought in the troughs and sold at the peaks have done very well, thank you. It has not been unremitting gloom for everybody.

Rob Thomas, a housing analyst with Union Bank of Switzerland, comments: "Over a longer period, house prices have held their value. They tend to go up in line with people's incomes, which rise faster than inflation. The two peaks were 1972/73 and the late Eighties. People who bought outside those periods are still sitting on big gains. From 1972 to 1992, in real terms house prices rose by 2.6 per cent per annum." Sadly, many who heeded siren calls to join the legions of home owners bought the wrong sort of property. Cheap studios - tarted up in building trade parlance as "starter homes" - one-bedroom flats and former council houses are at the bottom of the heap.

It would be tempting to believe claims that renting is now better than buying. Certainly it can provide more rapid mobility, but renting is not a cheap option. A three-bedroomed terraced house in the Midlands, rented over the last 25 years (allowing for 3 per cent annual inflation), would have cost the tenant pounds 198,720. If they had bought the house, the cost (including maintenance bills and assuming a repayment mortgage at a fixed rate of 7.99 per cent) would have worked out at pounds 97,504. So the Abbey National claims in a recent report. "Property now is unusually cheap in relation to income," Rob Thomas says. "And rents are higher than the cost of buying a home, even with a 100 per cent mortgage."

The problem is not with affordability, as Kenneth Clark admitted in his Budget, it is with overall economic confidence. Prices are now bumping along like a Ferrari with a flat tyre. But no sweat for Hough Hall, a Grade II listed eight-bedroom country house in Cheshire. When the agents Jackson-Stops were asked to sell it in 1979, the guide price was offers over pounds 100,000. The house, begun in the 17th century and added to over the years, has beams, oak panelling, a butler's pantry and a kitchen big enough to hold a party in. When the house came back on the market in 1982, the price had risen to pounds 175,000. Now Hough Hall is for sale again - at offers around pounds 650,000. Even taking account of costs for additions and restoration, Hough Hall has proved a good investment.

More modest homes have also paid their way. A three-bedroomed Victorian semi in Lymington, Hampshire, has accrued pounds 111,000 in value in 14 years. It was sold by GA Town & Country in 1978 for pounds 17,500; again in 1981 for pounds 48,000; for a third time in 1984 for pounds 62,000 and again in 1992 for pounds 128,500. The buyers and sellers avoided moving in the bad years. (This year, everyone agrees, is a good year for buying.)

In West Burton, north Yorkshire, Wensley-dale Cottage stands in the heart of the Dales National Park. The four-bedroomed period house faces the village green and the fells beyond. Even the garage has a beamed ceiling. When it came on to the market in 1978, it sold for pounds 21,700, which is probably what Kate Bush was making a week with her single "Wuthering Heights" (at number one for four weeks.) GA in Leyburn sold it again in 1991 for pounds 96,000. If you want to buy it now, it will cost pounds 132,950.

Estate agents rarely chart the financial progress of homes on their patch. But Nick Harding, of Keats Harding in Haslemere, Surrey, uncovered a pile of dusty old ledgers begun by a long-dead local agent more than 100 years ago. Reappearing suddenly, like Marley's ghost, they contain thousands of entries dealing with every major property in the area.

If you think renting expensive now, it wasn't cheap in 1899 Surrey either. A 12-bedroom house was offered at pounds 20 a week, use of two horses, landau and dog cart included. The landlord was Sir Arthur Conan Doyle and the house was Undershaw in Hindhead. Sadly, Keats Harding can't guarantee to find you a six-bedroom house like Fernhurst Vicarage, recorded in the ledger as advertised in 1896 for 10 guineas a week, including wages of two gardeners. Potatoes reserved. Cow by arrangement. !