Property and mortgages

Flats outperform the housing market

The average price of a flat has risen by more than £400 a month over the past decade – more than twice the rate of increase in the property market as a whole.

It means a flat in the UK costs an average of £208,000 today, up from £157,000 in 2004.

To put this 32% rise into perspective, detached homes have seen their value increase by just 12% over the same period.

However, the experts at Halifax – which has published the stats – say the figure is skewed by the high proportion of flats in London, where prices have outperformed the rest of the country.

This seems to be borne out by the fact that in many parts of the UK, it is terrace houses that have performed best.

“There has been a significant increase in the number of first-time buyers since 2010 compared with a modest decline in the number of those moving home,” said Halifax housing economist Martin Ellis.

“This difference is reflected in a bigger rise in prices over the past five years for those property types that are most popular with first-time buyers: flats and terraces.”

There was a slump across the market between 2007 and 2009 as the economy crashed spectacularly. The average price of terraces and flats fell by a third during that period before the market rebounded.

Halifax said a fall in the availability of mortgages during those difficult years hit first-time buyers particularly hard, and that explained the impact on flats and terrace properties.

Mr Ellis added: “Since 2009, larger property types – such as detached homes, semis and bungalows – have underperformed flats and terraces. The demand for such properties has been partly constrained by a widespread lack of equity amongst homeowners who bought for the first time around the peak in the market.

“Many of these homeowners are still finding it difficult to finance a move to a larger home.”