First-time buyers are giving flats a miss and moving straight into bigger properties, recent figures from the Land Registry suggest.
The average price of a flat in England has fallen by 2.1% over the year to an average of £220,146, according to the UK House Price Index for April, whereas all other types of property have increased in value.
This could be because first-time buyers are choosing to leap-frog flats and move straight into houses, with commentators suggesting that today’s buyers want to buy a home they’ll live in for longer than their predecessors.
The average price of a detached home in England has risen by 2.5% over the year to £374,995, whilst the average semi-detached property has gone up in value by 1.7% to £229,599. A terraced home in England now costs an average of £199,363, up 1.6% over the year.
Prices for all types of property have risen in Wales over the past year, although flats have seen the slowest growth, increasing in value by 5% over the year to April, compared to 7.4% for the average detached property.
Benefits of going for a bigger property
Jumping straight onto the second rung of the property ladder if you’re able to has several benefits.
Average moving costs often run into thousands of pounds, so the fewer times you move, the less you’ll spend. According to research by Lloyds Bank, the average cost of moving home in 2018 was £12,110.
Owning a bigger home means you’re more likely to stay put for longer, as you won’t immediately outgrow it if your circumstances change and, for example, you decide to live with a partner or start a family.
First-time buyers also don’t have to pay stamp duty on the first £300,000 of the property value when buying a home costing up to £500,000, but this tax break isn’t available to home movers, so it’s worth buying the best home you can afford.
Buy to let changes may also have affected flat prices
Landlords have seen several tax and regulatory changes introduced in recent years which have dampened demand for buy to let properties, many of which are often flats. This may also have contributed to the fall in the cost of this type of property.
Since April this year, landlords have only been able to offset 25% of their mortgage interest, and from the 2020-21 tax year onwards, it will only be possible for them to reclaim tax relief at the basic rate, whatever rate of tax they pay.
Landlords must also pay a 3% stamp duty surcharge on top of standard stamp duty rates whenever they purchase a buy-to-let property.
A spokesman for the Land Registry said: “Falling prices over the year in English flats and maisonettes was driven by negative growth in London for this property type. London accounts for around 30% of England flats and maisonette transactions.”
The cheapest area to buy a property in England is Burnley, where the average house costs £84,000. The most expensive area to buy is Kensington and Chelsea, where the cost of an average house is £1.3m.
First-time buyers bypass flats