“Race for space” could be over as flats prices rise more than houses.
End of Covid stamp duty break and reopening of some offices tip demand towards flats, say experts.
The “race for space” that became characteristic of the property market during the Covid pandemic could be starting to slow and flats would be affected, according to Halifax.
As people shunned city centre work and life during lockdowns, and the government introduced a stamp duty holiday, demand for country living – or at least a spare room – grew.
But in its latest snapshot of the housing market, the mortgage lender said there were signs this trend could be fading. Growth in the price of flats was now outpacing growth in the price of detached houses, which were in high demand during lockdown.
In November, flats were changing hands for 10.8% more than at the same time last year, while detached houses were typically fetching 6.6% more.
The percentage difference does not tell the whole story: according to Halifax, the average price of a flat that it agreed a mortgage on in November was £118,771, up from £107,159 last year, while the average detached house costs £517,650, compared with £485,684 in 2020. So a much smaller cash-price rise comes through as a bigger percentage at the lower end of the market.
But there are reasons why demand may have tipped in favour of flats. For months the housing market boomed on the back of sales of larger properties, with commentators reporting that lifestyle changes prompted by the pandemic were fuelling demand for homes with gardens, studies and spare rooms as more people worked from home.
These were also the properties where buyers had most to gain from stamp duty holidays launched after the first lockdown. In England and Northern Ireland, until the end of June homes costing up to £500,000 could change hands with no tax to be paid.
Buyers paying more than that for a property could save £15,000 in duty – enough to persuade many to bring forward purchases, or to look in a slightly higher price bracket than they might have otherwise.
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