The UK housing market is showing variable price dynamics, with flats experiencing more substantial growth rates compared to other property types, influenced by changing buyer preferences and economic conditions.
The UK housing market is experiencing variable dynamics, with flats seeing an accelerated price growth compared to other types of properties, as reported by Halifax. Over the year to February, flat prices increased by 2.7%, surpassing the growth of terraced (2.6%), semi-detached (1.7%), and detached homes (2.0%). This trend reflects a shift in buyer preference towards smaller, more affordable properties amidst rising borrowing costs.
Scotland experienced the most significant surge in flat prices, recording a 5.9% increase, whereas Yorkshire and the Humber saw a decline in flat prices by 2.9%, albeit with a notable increase of 5.0% in the prices of detached houses. The north east of England reported substantial growth in terraced and semi-detached homes at 7.6% and 5.9%, respectively.
First-time buyers, forming 53% of home purchases with a mortgage in 2023, are increasingly drawn to smaller properties, such as flats and terraced houses. This demographic indicates the highest proportion of newcomers to the property market in nearly three decades.
Despite ongoing challenges with mortgage affordability, driven in part by higher interest rates following the economic policies of Liz Truss’ Mini Budget, the housing market shows signs of resilience. London homeowners particularly have felt the impact, with mortgage payments in the capital escalating significantly. This has led to stagnant or declining house prices in the region, with an average annual decrease of 0.7% in property prices reported in March 2024.
Nevertheless, the overall sales volume in the housing market has seen a rise, indicating a mild rebound in activity. These dynamics underscore the evolving patterns of property demand and pricing across different regions and property types in the UK.
