The worth hole between homes and flats has hit a 30-year excessive, in keeping with newest knowledge from Zoopla.
The property portal revealed the common home worth is now £319,500, which is 67 per cent larger than the common worth of a flat at £191,300.
During the last 5 years, the common worth of a flat has elevated by 7 per cent in comparison with home values rising by 24 per cent.
A glut of flats in the marketplace mixed with a purchaser desire for homes is driving the worth hole even wider between the 2 property sorts.
The early weeks of 2025 noticed a 14 per cent within the variety of flats in the marketplace, with a extra modest enhance of 5 per cent within the variety of homes on the market.
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Zoopla says flats now account for one in 4 properties presently on the market.
The rise within the variety of flats on the market is operating properly forward of the expansion in new gross sales agreed at simply 4 per cent and purchaser enquiries, up only one per cent.
In distinction, the demand for homes is 16 per cent larger than a yr in the past, whereas the accessible provide is simply 5 per cent larger.
This mismatch in provide and demand explains why values of flats have risen by simply 0.5 per cent within the final yr, with home values up 2.2 per cent, in keeping with Zoopla.
Nonetheless, consultants say home values are unlikely to rise sooner given the better selection of properties on the market general and the additional stamp obligation prices for a lot of patrons that can come into play from 1 April.
Zoopla additionally says that many of homeowners of the flats which can be on the market are going through smaller capital beneficial properties than homeowners of homes.
Two in 5 flats on the market have an asking worth lower than £20,000 above the unique buy worth in comparison with simply 6 per cent of homes.
In actual fact, 15 per cent of flats listed on the market have an asking worth that’s under the worth they have been beforehand purchased for.
Why are homes extra common than flats?
While flats are higher worth for cash, patrons are nonetheless prioritising homes, particularly first-time patrons, in keeping with Zoopla.
Its knowledge exhibits that over half of first-time patrons trying to purchase at the moment, exterior London need a three-bed home. That is up from 44 per cent in 2017.
Demand for one and two-bed flats has declined from 25 per cent to 17 per cent over the identical interval.
The seek for area over the pandemic boosted demand for homes greater than flats and this development is but to reset.
There are additionally considerations over operating prices for studios. These embody escalating service costs and floor rents, in addition to fireplace security considerations for some newer flats.
Greater than half of leaseholders at the moment are paying extra every year on their service cost than they do on council tax, evaluation by Hamptons not too long ago revealed.
The typical annual service cost invoice for a flat in England and Wales hit £2,300 in 2024, an 11 per cent enhance on the earlier yr, in keeping with the property agent Hamptons.
This dwarfed the two.5 per cent price of inflation within the 12 months to December 2024 – the speed at which the price of items and providers goes up on common.
On the rise: Common service costs now stand above £2,000 in each area of England, in keeping with evaluation by the property agent Hamptons
Richard Donnell, govt director at Zoopla stated: ‘The housing market stays resilient with extra individuals trying to transfer house in 2025 and 2026 than this time final yr.
‘Common earnings rising by six per cent during the last yr, properly forward of inflation, is boosting purchaser confidence and serving to to reset housing affordability.
‘Flats have change into even cheaper in comparison with homes during the last 5 years.
‘Consumers are nonetheless prioritising homes over flats however there are alternatives for canny patrons ready to do their homework and weigh up the acquisition of a flat moderately than probably ready longer to purchase a home.
‘Whereas market exercise is on the rise we count on home worth progress to be stored in verify over 2025.
‘There was a large enhance in properties on the market within the early weeks of the yr which is giving patrons better selection and stronger negotiating energy.
‘Increased stamp obligation prices for a lot of from April will preserve a lid on costs which we count on to extend by 2 to 2.5 per cent with above common progress in additional reasonably priced markets exterior southern England.’
