4 June 5, 2022The Sunday TimesHome
buying a small home outside
the city. Low interest rates and
the stamp-duty holiday helped
them to achieve this.WILL FLAT PRICES
EVER CATCH UP?
The gradual return to cities is
likely to start to rebalance the
price gap over the next 12
months, according to Lucian
Cook, head of research at
Savills, which forecasts that
house-price growth will
slow from 7.5 per cent
this year to 5.1 per
cent between 2023
and 2026. The
phasing out of the
government’s Help
to Buy scheme in
2023 will also lead to a
softening of house prices,
Law predicts.
The scheme boosted the
new-build sector and sent
demand for houses soaring.
It’s true that Help to Buy also
pushed up flat prices in
London, but 81 per cent of
transactions under the
scheme have been for houses.
“When the Help to Buy
support has been taken away,
we may see a sharp slowdown
in house prices,” Law says.
“[Right now] the gap between
house prices and flat prices
may be the highest you’re ever
going to see.”buyers stay put and save for
longer to bridge the gap, Fell
says. It could have an effect on
society too: birthrates could
come down as couples stuck in
flats put off having babies.WHY IS THERE SUCH
A PRICE GAP?
The aversion to flats can
hardly come as a surprise in
the wake of the pandemic,
says the buying agent Henry
Pryor. “A home is no
longer somewhere
that we just go back
to at the end of the
day working in the
salt mine. We’ve
been spending all
our time there. [They
became] a school, an
office space. It has to be
flexible — people wanted as
much space as possible. And
that will take some time to get
out of people’s heads. Flats
with no garden or roof terrace
are incredibly difficult to shift
at the moment.”
There is also a bigger supply
of flats because first-time
buyers don’t want them any
more, according to Stuart
Law, chief executive of Assetz
Capital. Law says that since
the pandemic started many
are going straight from a
rented flat to what is
traditionally the second step:MARKET
WATCH
highest since 1995. “At the
same time the gap between
people losing money on a
house versus a flat has also
never been larger. This means
that while flats make up about
20 per cent of sales across
England and Wales, last year
flat sellers accounted for 51
per cent of people who lost
money [in absolute terms]
when selling their home.”WHAT ARE THE
CONSEQUENCES FOR THE
PROPERTY MARKET?
If the growing divide in price
between flats and houses isT
rading up is hard to
do and getting
harder, especially
if you are living in a
flat. New research
from Hamptons shows that the
gap between flat and house
prices is growing.
“From 2010 right to the
start of the pandemic the
average house in an area cost
50 per cent more than the
price of a flat, but this gap
widened to 68 per cent last
year and has hit 84 per cent so
far this year,” says David Fell,
senior analyst at Hamptons,
who adds that the gap is thepermanent, it will have
“significant implications” for
the market, particularly for
upsizers and anyone trying to
climb the property ladder, Fell
says. “In previous years
someone who bought a flat
could have expected its value
to at least track any increases
[proportionately] to the value
of houses locally, but over the
past two years this has not
been the case. Buyers can’t
trade up.”
If flat owners are trapped,
that will weigh down
transaction numbers across
the country, as would-beMOVING ON
UP HAS NEVER
BEEN SO HARD
The gap
between
flat and
house
prices is
the highest
since 1995Join in the
conversation at
thetimes.co.ukHUGH
GRAHAM
@HughGrahamST