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Flat Prices Rise Sharply

The average price of a flat has risen sharply over the past decade, outperforming other types of properties, according to a recent report from Halifax.

Over the past ten years, flat prices have increased by 32% on average, while the price of other residential properties has only grown by 15%. The lowest growth has been in detached homes and bungalows, which saw prices rise by only 12% and 13% respectively.

According to Halifax, much of the growth in flat prices is down to the rise of prices in London, where flats apparently represent a relatively high proportion of the property market.

The report highlights that all property types recorded substantial price falls during the housing market downturn between 2007 and 2009. Terraced houses (-33%) and flats (-32%) performed the worst, declining in value by approximately one-third. Bungalows (-21%) and detached homes (-26%) fared best.

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 (FTBs), in particular, to enter the market. This helps to explain why terraced houses and flats – which are very popular with FTBs – recorded the largest price falls during 2007-2009.

However, prices have improved across all property types since 2009, with flats recording the largest increase between 2009 and 2014 (43%). Terraced properties (31%) experienced the next biggest rise. Bungalows have seen the smallest gain (15%).

“Since 2009, larger property types – such as detached homes, semis and bungalows – have underperformed flats and terraces,” explained Martin Ellis, housing economist at Halifax. “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.”

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