No-one can deny the UK property market has been riding high in recent months. Since the first lockdown was lifted in May, surveyors, estate agents and conveyancers have been kept busy and there is now a huge backlog of transactions following the high demand to sell and buy.
indeed, in October Halifax recorded a record average high in the price of property over the past year – year-on-year growth of 7.5%. However, break the figures down further and you will find houses – regardless of whether they are detached or semi-detached – faring far better than flats.
Houses twice as likely to sell
Analysis by property research company PropCast shows only 27% of flats listed are selling, compared with 44% of houses countrywide. Furthermore, flats in London are taking up to 70 days to sell compared to just 29 days for houses, according to upmarket estate agents Hamptons International. This is the first time in eight years that flats in the capital have been overtaken by houses when it comes to buyer demand. So, what’s causing the rush to ditch flats?
No prizes for guessing the biggest reason, say property analysts – it’s the desire for outdoor space as a result of the pandemic and the possibility of future lockdowns. Houses tend to have gardens, flats don’t (even if some of them do have a roof terrace or balcony). And, if they can’t get a house with a garden, then many inner-city residents at least want somewhere less polluted by people as well as somewhere they can be closer to nature. You’re talking about the suburbs and villages here – neither of which are known for their high concentrations of flats.
Working from home has also increased the desire for additional space, such as a third bedroom or loft space, which can easily be converted into a home office.
First-time buyer numbers down
Another reason for the declining popularity of flats is the reduced number of first-time buyers. Flats – especially studio and one-bedroom properties – are more popular with this first rung of the property ladder because they tend to be less expensive than houses to buy. In addition, since they are younger and typically single, these buyers don’t mind being in the heart of a city where all the pubs, restaurants and entertainment venues are.
There are fewer first-time buyers because there simply aren’t that many higher loan-to-value mortgages to go around. That means first-time buyers need more money for a deposit and, as we’ve learned over recent months, it’s the younger age group that has been hardest hit by the lockdown, with many tending to be employed in hospitality, retail and tourism. Data from the Office of National Statistics shows there are now 156,000 more unemployed 16-to 24-year-olds (referred to as Generation Z) since May.
Lockdown hits luxury apartment market
But it’s not just in the first-time buyer market that flats are faring poorly. Luxury apartments in the likes of inner-city London and quayside Manchester, Liverpool and Glasgow are also plunging in value in a bid to attract buyers. In London, the popularity of plush apartments has fallen by 1.8%. That’s because wealthier buyers are also opting for housing and green space in preference to high-rise living.
Even if we get that promised vaccine (or two) for Covid-19, will the popularity of flats ever recover? Not according to BuiltPlace analyst Neal Hudson, who predicts the end of the ‘property ladder’ thanks to the increase in value of houses compared to flats.
“The idea that you could buy a flat in a city centre and then, after a few years, trade up to get a house in the same area doesn’t work now for the vast majority of people,” he said.
What it does mean, though, is that people may move sideways (ie: to “further out” locations) rather than upwards in their current city or town.
