Flat prices have risen by an average of £1,000 per month since 2009 – faster than any other property type.
Average prices have grown by 53 per cent in the last seven years compared with growth of 39 per cent for all property types, according to new research from Halifax.
As a result, the average cost of a flat surged from £159,292 in the fourth quarter of 2009 to £243,936 in Q4 2016.
The UK-wide growth has been boosted by the rapid increase in flat prices in London (65 per cent), where flats represent just under half (48 per cent) of all sales compared with the UK average (excluding London) of 11 per cent.
The average price of a flat in London is now £398,038, meaning that buyers are on average paying £230,894 more than flat buyers in the rest of the UK (£167,144).
Nevertheless, growth has also been strong in the rest of the country, and flats have been the best performing property type since 2009 in five out of the 11 regions: North (31 per cent), North West (37 per cent), Yorkshire and the Humber (30 per cent), South West (33 per cent) and Scotland (21 per cent).
Terraced homes were the next fastest-growing property type, with 43 per cent growth over the past seven years.
The average price of a terraced house is now £215,690, making them the most affordable type of property in the UK, followed by semi-detached homes (£225,070) and then flats (£243,936).
Martin Ellis, Halifax housing economist, said: “Nationally, terraced and semi-detached homes are the most affordable and popular homes with buyers accounting for 60 per cent of sales during 2016. However average price growth for flats, helped by the London market, have outperformed all other property types since 2009.
“There has been an increasing trend for first time buyers to choose semi-detached homes over the past seven years, whilst terraced homes have shown a decline in popularity. The rise in the age of a typical first time buyer may partly account for this change in preference towards the family-friendly semi.”
Tony Silver, director at London-based White House Mortgages, said he was “not surprised at all” by the research.
“When I am talking to my investors in buy-to-let, I tell them to buy one or two-bedroom flats, particularly in London, because they will have good rental yields and you can always sell them,” he continued.
“The tax changes will have affected first-time landlords, but when you look at the more experienced landlords it does not make any difference – people are not doing this for income, they are in it for the long haul, and that is about capital appreciation.
“The Halifax look at it nationally, and what we have to do is look at the regionals. Greater London is a little world of its own - people can’t afford to buy and get pushed into the rental market, and getting those deposits together is difficult.”
simon.allin@ft.com
