'We relocated from the suburbs to the city'

Most couples starting a family usually leave central London for the suburbs, but the designer Jeremy Southgate and his wife, Maral Ovanessoff, did the opposite, just as their first baby was due to be born. Happy to sacrifice space and a garden for a great location, the couple bought a run-down two-storey flat in a Fifties-era block in Marylebone and have converted it into a compact family home. Neither of them wanted to commute.

"It's a question of priorities," says Ovanessoff, who is 37 and works for an Armenian charity. "I grew up in Ealing and spent half my life travelling on the Tube. We walk, or Jeremy cycles, everywhere. We both work from home, there are great shops, lots of good schools nearby and though we don't have our own garden, we do have access to private garden squares round the corner. We hardly ever need to use the car and Marylebone is just delightful – especially for children."

Southgate and Ovanessoff paid £730,000 for the 1,080sq ft space and have turned the top floor into a single eating and living area while on the floor below they built two bedrooms – one with its own en suite shower room – and a bathroom. They sleep in the main bedroom and little Asdghig, who is now almost two, sleeps in the other. Her bedroom also has a compact desk and a computer where Southgate, who is 42, works.

Every inch has been used creatively – whether for storage or living – but by keeping the top floor open plan, with its windows on both sides and a roof skylight, it feels more than adequately spacious. "Londoners don't make enough use of the space they have," says Southgate, a director of an architectural practice specialising in urban-housing projects.

"We maximised the living, cooking and eating space by not having a kitchen table. Instead we built an island with polished white concrete work surfaces that doubles as our eating area. Another feature is the single plain white wall, which stands proud of the structural wall. It doubles as a home cinema as we can project movies on to it. It also means we don't need a television, which takes up so much space."

At either end of this wall, Southgate designed hidden bookshelves, while on the opposite side of the room is a work station with a computer. It all disappears behind flush white doors.

Other space-saving tricks include the small rectangular bathroom corner basin, with its single mixer-tap designed by Philippe Starck, while the tiny shower room next to it has a glazed slit that lets in "borrowed" light. The washing machine and boiler are housed in a cupboard in the kitchen area. As budget was a big issue – they spent a total of £80,000 – Southgate and Ovanessoff were careful to prioritise. They splurged on the white polished concrete work surfaces and on the extra-wide, long and thick Douglas fir floorboards, which have been treated with lye bleach and soap to bring out the natural grain of the wood. Otherwise they were careful: kitchen cabinets are basic, the cabinetry is painted MDF and utilitarian white tiles have been used in the kitchen area.

Splashes of colour come from the Tolix stools that stack in a corner when not in use and a range of Marimekko textiles and ceramics, from the vibrant floral shower curtain to a bold graphic tea towel. A pair of Matthew Hilton's statement Colombo chairs flank a single green fig tree in a planter. Lighting, including slim white pendants, comes from Conran. Beautiful simple ceramics, including a few carefully chosen ones from Muuto, are dotted about and a sleek felt-covered Kashan sofa gives Southgate and Ovanessoff room to lie down and relax while watching movies together.

"We hate clutter and I'm very strict about it," says Ovanessoff, wiping the oven clean. And what about baby No 2, what will they do then? "Oh we'll get a bunk bed," she says.

Jeremy Southgate worksarchitecture.com (020 7224 8750)

Flooring: dinesen.com

Kitchen units: howdens.com

Matthew Hilton Colombo chairs: delaespada.com

SF02 Kashan sofa for E15: chaplins.co.uk

Marimekko textiles: marimekko.com