We all know that house prices have risen rapidly in recent years, but new research from Halifax shows that some property types have seen much faster price rises than others – and flats have outperformed everything.
The figures show that flat prices have risen by £86,474 since property prices were at their lowest following the financial crisis, rising from £150,749 at the end of 2008 to £237,223 at the end of 2015. This 57% rise equates to an increase of £1,029 every month, and is significantly higher than the 37% rise for all residential properties over the same period.
It also means that buyers are, on average, now paying £17,978 more for a flat than for a semi-detached home, with only detached properties and bungalows commanding a higher price. Furthermore, detached homes recorded the smallest rise (20%) over the past seven years, while terraced and semi-detached houses have seen price rises of 38% and 34% respectively – all far less than the 57% rise in flat prices.
Much of the national rise in flat prices can be attributed to the rapid increases in London – which are now 62% higher than they were in 2008 – and with flats representing a much higher share of the property market in the capital than elsewhere (50% compared with the UK average of 17%), it's perhaps little wonder that average flat prices have risen to such an extent.
Indeed, if London performance is excluded, it's a different picture entirely, with price growth in the last seven years actually being greatest for terraced homes (31%) and semi-detached houses (29%), both of which have outpaced flats (26%). However, even on this basis, detached properties remain the worst performer on this basis, rising by 19% over the same period.
Given that flat prices have increased so rapidly, it's perhaps no wonder that terraced homes (30%) and semi-detached homes (29%) are still the most popular types of property purchased, the same pattern as that seen in 2008. Since then, the popularity of semi-detached properties has actually increased (rising from 25% to 29%), while the proportion of flat sales has fallen over the same period (down from 22% to 17%).
This shift has been particularly marked for first-time buyers, the report noted, with the popularity of semi-detached homes for this demographic having risen from 23% to 29% since 2008, while flat sales for first-time buyers have fallen from 32% of all property sales to just 23% over the same period.
"The high prices being paid for London flats have had a significant impact on the national picture when it comes to property type winners and losers," said Martin Ellis, housing economist at Halifax. "Semi-detached and terraced homes have remained the most popular property types amongst purchasers, and increasingly so for first-time buyers. Whilst many might expect a flat to be the most typical first step on the housing ladder, it is clear that this is shifting with more and more first-time buyers bypassing this option, choosing a semi-detached house instead."
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