New research has found that more first-time buyers are choosing to bypass flats to move straight into houses, resulting in a fall in the asking price of apartments.
Flats and apartments are often built and designed specifically for the rental market. This is especially the case in cities where people are looking for a cheap rental property rather than wanting to put down roots in an urban area. The research suggests that people are still happy to rent a flat but do not wish to part with their hard earned deposit unless it is for a long-term home, which is more likely to be a detached or semi-detached property.
In the last year, the cost of a typical apartment or maisonette in England has fallen by an average -2.1% but other properties, particularly detached houses, have steadily increased in value in most regions. In Wales, all types of property are going up in price but again flats and maisonettes are the slowest to increase.
First-time buyers now take longer to save for a deposit and are trying to ‘hold out’ for what they really want before buying. Home buyers are also living in their homes for around 8-10 years before moving, much longer than the average 3-4 years of twenty years ago.
Despite the downturn in buyers, developers are still seeing market potential. There are plans for a major development of the Metalworks in Liverpool and major housing projects are still ongoing in other areas including the old Battersea Power Station in London. Unsurprisingly, house prices remain high in London, and the price of apartments in Kensington and Chelsea average over a £1 million.
Apartments are becoming more affordable and if you do your homework and shop around you could purchase a flat for less that £80,000 in around 17 towns and cities within the UK. Bargains can be had in Burnley where the cheapest flats average £54,161 and Hartlepool, where the average price of a flat is £57,659. These types of flats may be perfect for downsizing or starting out on the property ladder.
First time buyers currently represent 36% of the home buying market and the effect of these home buyers choosing a larger property will further impact apartment prices. Around 80% of first time home buyers will get some form of help with their finances to attain these longer-term homes.
One couple who skipped the flat stage entirely is Sarah and Oliver Brown from Kent. They reserved their first home together with a 5% payment through the ‘Help to Buy’ scheme. Sarah is expecting their first child and they now need a larger, family home so have opted for a three bedroom house near Maidstone in Kent, instead of a flat.
The couple could have purchased on a small London flat which would have been more convenient for working on the South Bank. However, they had decided to aim for a house long before the pregnancy as they knew they wanted to start a family so did not see the point in moving twice. The couple also wanted a garden and room for friends or family to stay. The daily commute for Oliver takes one hour and fifteen minutes each way and a season ticket costs nearly £500 a month, but the couple feel they have made the right decision long term.
If you do decide to buy a flat to take advantage of lower prices then it is important to consider factors such as sharing stairs, lifts, entrance halls, bin stores, etc. You will also need to check out the building and grounds management, so you can be aware of any additional fees that may be required.
Of course houses also come with rules and stipulations. Even if the house is sold freehold it may be subject to covenants or obligations. There have been stories recently about developers selling leasehold new build properties with ground rents linked to the rate of inflation. A ground rent that doubles every five, ten or twenty years can soon add up to a sizeable amount and put off mortgage lenders. It can also reduce the value of the property when it comes to reselling. It is important to find out exactly what you will be paying in ground rent before purchase to avoid being stung.
Whether you choose to buy a house, flat or any other type of property, a chartered surveyor will be able to advise you about the structural elements, grounds or any type of general queries you may have.