Flats outstrip houses in the race for a smaller space: Halifax House Price Index
Sarah Coles, Personal finance analyst at Hargreaves Lansdown, comments on the Halifax House Price Index, which shows flats outstrip houses in the race for a smaller space.
Key points from the publication:
- In the three months to November, we saw the fastest quarterly growth for 15 years (3.4%).
- House prices grew 8.2% in the year to November.
- Average prices hit a record of £272,992. They’re up £20,000 in a year.
- Flats are now up 10.8% in a year, while detached properties are up 6.6%.
- The price of homes bought by first-time buyers was up 9.1% compared to 8.8% for home-movers.
Sarah Coles says:
“The baton has been passed to first-time buyers in the final leg of the race for space. Demand from first-timers means the rising price of flats is now outstripping the rise in prices of the big detached properties we were snapping up earlier in the pandemic.
“There are a few forces at play here. FOMO plays its part. Once prices start to rise quickly, anyone trying to get onto the property ladder starts to feel that unless they buy soon, prices will rise out of the reach of their deposit. It means they’re asking for help – both from government schemes like the Lifetime ISA and Help to Buy equity loan, and from their families.
“The Bank of Mum and Dad have seen the value of their own home rise, so they’re more comfortable about dipping into the equity in order to find a deposit for their offspring.
“And once they have the deposit in place, rock bottom mortgage deals are a major attraction, because first timers can fix at such low rates that it makes their monthly payments manageable.
“But it’s not just first-timers. Some of these smaller properties are likely to be second homes and buy-to-lets. Remortgage figures from UK Finance show that the amount of money people are withdrawing when they remortgage has been rising, and that on average those who remortgage to free up cash for reasons other than debt consolidation or home improvement take an average of £80,000. There’s a strong chance that an awful lot of this is funding another property.
“When we think of second homes we might usually think of a cottage by the sea or in the countryside, but the pandemic has changed the way we live, and may well be affecting second home trends too. The growth of flexible and hybrid working means it makes more sense to buy a home where we really want to live, and a small place near work for when we absolutely have to go into the office.”
Kindly shared by Hargreaves Lansdown
Main photo courtesy of Pixabay
