The average price of a flat in the UK has risen by nearly £51,000 or £425 per month, from £157,172 in 2004 to £208,169 today, according to the research from the Halifax building society.
The 32% increase in the average price of a flat is more than double the 15% rise for all residential properties over the same period. Detached homes at 12% and bungalows at 13% have recorded the smallest rises over the past 10 years.
Whilst flats have increased most in price nationally since 2004, much of this rise is due to the performance of flat prices in London, where flats represent a relatively high proportion of the property market.
Terraced homes have been the best performing property type in the greatest number of regions. These five are the North West, Yorkshire and the Humber, West Midlands, East Midlands and East Anglia.
Semi-detached and terraced homes have remained the most popular types of property purchased over the past ten years. These two types represent 60% of all home sales in 2014; up from 56% in 2004.
For first-time buyers, semi-detached homes have risen in popularity, accounting for 29% of purchases in 2014 compared with 25% in 2004. Detached sales have fallen from 21% of all property sales to 16% over the past decade.
In the last five years prices have improved across all property types with flats recording the largest increase between 2009 and 2014 at 43%. Terraced properties at 31% growth experienced the next biggest rise. Bungalows have seen the smallest gain of 15%. The increase in flat prices nationally has been led by London with growth of 44% with a more subdued performance elsewhere in the country.
All property types recorded substantial price falls during the housing market downturn between 2007 and 2009. Terraced houses fell 33% and flats were down 32% while bungalows fell by 21% and detached homes were down 26%.
The report says that the tightening in credit criteria and the reduction in mortgage availability following the onset of the financial crisis made it more difficult for first time buyers in particular to enter the market. This helps to explain why terraced houses and flats, which are very popular with first time buyers, recorded the largest price falls during 2007 to 2009.
‘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. 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,’ said Martin Ellis, housing economist at the Halifax.
‘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 home owners who bought for the first time around the peak in the market. Many of these home owners are still finding it difficult to finance a move to a larger home,’ he explained.
The research also shows that a typical flat currently costs less than £100,000 in the East Midlands at £94,500 and between £100,000 and £110,000 in the North, Yorkshire and the Humber and West Midlands.
The average price of a terraced home is below £120,000 in the North, North West, Yorkshire and the Humber and Wales. Whilst London has by far the highest average price for flats, at £328,800, flats are the least expensive of all property types in the capital.
The average price for detached properties is over £225,000 in all UK regions. The average price of a detached property is £706,000 in London and £481,000 in the South East.
