The average price of a flat has increased by £86,474 (£1,029 per month) since property prices were at their lowest in late 2008 – from £150,749 in the fourth quarter of 2008 to £237,223 at the end of 2015, according to the latest research from Halifax.
The 57% increase in the average price of a flat is significantly higher than the 37% rise for all residential properties over the same period. Additionally, it means that buyers are on average now paying almost £20,000 (£17,978) more for a flat than for a semi-detached home, meaning only detached properties and bungalows command a higher price nationally. Detached homes recorded the smallest rise (20%) over the past seven years, while terraced and semi-detached houses saw price rises of 38% and 34% respectively since 2008.
A considerable proportion of the national rise in flat values since 2008 is due to the rapid increase in flat prices in London (62%); flats represent a much higher share of the property market here than elsewhere; half of sales in the capital (50%) are of flats compared with the UK average of 17%.
However, if London performance is excluded, then price growth is greatest for terraced homes (31%); closely followed by semi-detached houses (29%). Both have outpaced flats (26%). Detached home properties remain the worst performer (19%) on this basis.
Prices have increased by around 20% across all property types since 2013 with the exception of detached properties, which have seen a much lower rise (8%).
Martin Ellis, housing economist at Halifax, said: “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. This is the result of more flats being sold in the capital and at the higher end of the market. Such is their popularity that flats continued to outperform other property types in the capital last year, with an annual price growth of 17% by the end of 2015.”
Terraced homes (30%) and semis (29%) are still the most popular types of property purchased as in 2008. There have, however, been some changes in market composition over the past seven years, with an increase in the share of semi-detached homes (from 25% to 29%), whilst the proportion accounted for by flats has fallen from 22% to 17%.
This shift from flats to semis has been particularly marked for first-time buyers. Semi-detached homes have risen in popularity, accounting for 29% of purchases in 2015 compared with 23% in 2008. However, flat sales for first-time buyers have fallen from 32% of all property sales to 23% over the same period.
Ellis added: “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.”
A typical flat costs less than £120,000 – below the lowest stamp duty threshold – in the North, Wales and Yorkshire and the Humber, and costs between £120,000 and £145,000 in the North West, West Midlands, East Midlands and Scotland.
Whilst average flat prices are lower than for any other property type in London, at £385,269, they are considerably higher than flat prices anywhere else in the UK.
The average price of a terraced home is between £120,000 and £147,000 in all regions outside southern England.
