The search for more space following Covid-19 related lockdowns is driving demand for houses, pushing prices higher.
The rate at which the price of houses is rising is more than double that for flats as lockdown-weary Britons look for more space.
Annual property price growth for houses in the UK is currently running at 4.3%, while price growth for flats is just 1.8%, according to our latest House Price Index.
The trend is being seen across the country, with all regions reporting significantly stronger increases in the value of houses than those of flats.
Richard Donnell, our director of research and insight, said: “The search for space has been a key feature of the rebound in market activity as households re-evaluate their housing requirements.
“Demand for family homes with gardens, parking and extra space to work from home has continued to rise.”
Why is this happening?
The coronavirus pandemic triggered a ‘once-in-a-lifetime reassessment of housing’ in 2019, as lockdowns and social distancing created a greater appetite for home offices and outdoor space.
Analysis of our advanced search property tool over the past 12 months found that ‘garden’ was the top feature buyers looked for, while ‘detached’, ‘rural’ and ‘secluded’ all also made it into the top 10.
The high level of demand for houses is putting upward pressure on prices, as demand outstrips supply.
By contrast, flats are suddenly in less demand than they were before the pandemic, leading to slower price growth.
Who does it affect?
The rise in the value of houses was strongest in Wales, followed by the North West and Yorkshire and the Humber, all regions in which affordability is less of a barrier to price growth.
By contrast, the price of flats was broadly unchanged year-on-year in the East, while they edged ahead by less than 1% in the West Midlands and the South West.
The current trend could make it harder for sellers trying to trade up the property ladder from a flat to a house. This is because they are not only likely to find their current property takes longer to sell, but they will also face increased competition for their next home and an enlarged gap between the price of the two properties, if they are staying in the same region.
What’s the background?
The quest for more space has contributed to a shift in the demographic profile of home movers, and there has been a notable increase in sales in more affluent demographics, where house prices are typically higher.
This shift, along with a high level of transactions, has contributed to a 26% rise in the value of property that changed hands in 2020, with sales rising by £62 billion to £300 billion.
Moving into 2021, older, equity rich, long-time homeowners are expected to continue to take a growing share of sales.
Top three takeaways
The rate at which the price of houses is rising is more than double that for flats as lockdown-weary Britons look for more space
Annual property price growth for houses in the UK is currently running at 4.3%, while price growth for flats is just 1.8
The trend is being see across the country, with all regions reporting significantly stronger increases in the value of houses than those of flats.
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