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Flat prices go through the roof

Flat prices go through the roof

Category: Mortgages

Updated: 29/03/2016
First Published: 29/03/2016

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

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.

Post-crisis boom

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.

London influence

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.

Lower-priced properties rein

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."

What next?

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