The average price of a flat in the UK has risen by nearly £51,000 (£425 per month) from £157,172 in 2004 to £208,169 today, according to latest research from Halifax.
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 (12%) and bungalows (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 (five of the 12): 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.
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%). The increase in flat prices nationally has been led by London (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 (-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.
Martin Ellis, housing economist at Halifax, said: “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: flats and terraces.
"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. Many of these homeowners are still finding it difficult to finance a move to a larger home."