Flats and Terraced prices up by a third since 2003
The 35% increase in the average price of a flat is closely followed by terraced houses which increased by 32%. Detached homes have recorded the smallest rise, at 17%, over the past decade.
Martin Ellis, housing economist at Halifax, said: “While prices have risen for all property types during the past there have been a number of distinct periods of performance in the last 10 years. Bungalows and detached properties fared best during the downturn between 2007 and 2009 as these property types are less popular with first-time buyers who were particularly badly affected by the tightening in mortgage credit criteria and availability at the height of the financial crisis.
“During the recovery 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 homeowners who bought for the first time around the peak in the market and who are therefore finding it difficult to finance a move to a larger home.”
Flats or terraces were the best performers in all but two regions over the last decade; in the West Midlands bungalows were the top performing properties while in the South East semi-detached properties fared best.
Much of the rise in flat prices can be attributed to the performance of London apartments which make up a relatively high proportion of its property market.
Terraced homes performed best in six regions; the North West, Yorkshire and the Humber, the East Midlands, Wales and the South West.
During the four years prior to the peak of the housing market terraced properties rose 73% and flats increased by 61% in value. Detached homes and bungalows experienced the smallest increases at 47% and 48% respectively.
During the downturn, from 2007 to 2009, all property types recorded substantial price falls but bungalows fared best. During this period the average price of a bungalow fell by 21% to £180,271. Terraced houses fell by 33% and flats dropped by 32%.
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 saw the largest price falls during 2007-2009 as these property types are very popular with first-time buyers, accounting for around 60% of all first time purchases.
Circumstances for first-time buyers were significantly easier during 2003 to 2007 with a much greater availability of high loan to value mortgages which helped to drive up prices for terraces and flats significantly in this period.