The property bubble is waiting to burst

As a general rule, it is a mistake to go through life thinking about how much one’s house is worth. In the summer of 2002, when I bought my ‘lovely end of terrace period cottage providing compact character accommodation’ in Gospel Oak, London NW5, I assumed I had managed, with unerring incompetence, to buy at the very top of the boom. It seemed to me unimaginable that anyone would be willing to spend more than the grossly inflated sum of £385,000 which I had paid for my small, damp, jerry-built house.

My imagination was defective: to my stupefaction, the property boom continued for another five years, until the collapse of Northern Rock in September 2007. So instead of avoiding thinking about the value of my house because it was worth less than I had paid, I avoided thinking about it in order not to succumb to the smug illusion that I was several hundred thousand pounds richer.