Demand for smaller homes pushes up house prices - Halifax

29th Apr 2024 07:14

(Sharecast News) - UK house prices jumped by nearly 2% over the last year, industry data showed on Monday, driven by demand for smaller homes.

According to research from Halifax, annual property price growth reached 1.9% in February, to £282,430, a notable recovery from October's low of -4.1%.

However, Halifax said that within that, price growth for different property types varied significantly.

Prices of flats and terraced houses jumped 2.7% and 2.6% respectively, but semi-detached properties increased by 1.7%.

Amanda Bryden, head of Halifax Mortgages, said: "It is important not to gloss over the challenges facing the UK housing market, given the impact of higher interest rates on mortgage affordability, coupled with a continued lack of supply of new homes.

"But scratch beneath the surface and there is a more nuanced story, one which shows that demand for different property types in different parts of the country can vary hugely.

"One way to compensate for higher borrowing costs is to target smaller properties. This is especially true among first-time buyers...who now account for the largest proportion of homes purchased with a mortgage in almost 30 years.

"We see this reflected in property prices for the first few months of this year, with the value of flats rising most sharply, closing the growth gap on bigger properties that's existed for most of the last four years."