Britain’s biggest mortgage lender today said flats are back in fashion as first time buyers target smaller properties due to high mortgage costs.
Halifax said prices of flats are now rising faster than houses four years after the pandemic triggered a “race for space” that boosted demand for homes with gardens and left small flats without outdoor space almost unsellable.
The lender today revealed that the property market trod water during April with the average price rising 0.1% in the month to £288,949, while the annual rate of growth was 1.1%.
In London prices rose 0.1% year on year to an average £539,336.
Halifax’s head of mortgages, Amanda Bryden said: “The reality is that average house prices have largely plateaued in the early part of 2024. This reflects a housing market finding its feet in an era of higher interest rates. While borrowing costs remain more expensive than a few years ago, homebuyers are gaining confidence from a period of relative stability.” Bryden said activity and demand was improving.
“Our recent research also found that buyers are adjusting their expectations, with first-time buyers in particular compensating for higher borrowing costs by targeting smaller properties. We see this reflected in property prices for the first few months of this year, with the value of flats rising most sharply, closing the ‘growth gap’ on bigger properties that’s existed for most of the last four years.”
The Bank of England’s Monetary Policy Committee is expected to leave the cost of borrowing unchanged at 5.25% when it meets on Thursday. Markets are pricing in a roughly one-in-ten chance of an interest rate cut.
