The UK property market is experiencing a remarkable shift as new data from Halifax reveals flats have outperaced detached homes in price growth for the first time in nearly eight years. This surprising reversal in market dynamics comes alongside a significant surge in mortgage approvals, painting a complex picture of Britain's housing landscape.
Flat Prices Take the Lead
According to the latest Halifax House Price Index, flat prices increased by 1.8% annually in August, while detached properties saw a more modest 1.6% rise. This marks the first time since November 2015 that flats have led annual price growth among all property types.
"We're witnessing a notable rebalancing in the market," said Amanda Bryden, Head of Mortgages at Halifax. "After a period where detached houses led the way, we're now seeing renewed demand for flats as buyers adapt to higher borrowing costs."
Regional Variations Tell Different Stories
The national picture masks significant regional disparities. Northern Ireland continues to demonstrate remarkable resilience with house prices surging by 4.1% over the past year. Similarly, robust growth was recorded in the North West (3.8%) and North East (3.3%) of England.
However, not all regions shared in this positive trend. Eastern England experienced a 0.9% decline in property values, while the South East saw prices dip by 0.6%, highlighting the ongoing north-south divide in market performance.
Mortgage Approvals Hit 17-Month High
In a separate development that signals growing market confidence, Bank of England data shows mortgage approvals climbed to a 17-month high of 60,000 in August. This represents a significant increase from July's 56,100 approvals and marks the highest level since March 2022.
Bryden noted: "The continued resilience seen in house prices reflects a market that continues to adjust to higher borrowing costs. While there's always room for volatility, particularly given the pace of previous years' growth, the average house price remains £1,000 above the level seen at the start of the year."
First-Time Buyers Driving Market Activity
Industry experts suggest that first-time buyers are increasingly targeting smaller properties, including flats, as they seek more affordable options in a challenging interest rate environment. This shift in buyer behaviour appears to be driving the unexpected outperformance of flats compared to larger detached properties.
The average UK house price now stands at £293,834, according to Halifax data, showing remarkable stability despite economic headwinds and higher mortgage rates affecting affordability for many prospective buyers.
What This Means for the Property Market
The current trends suggest several key developments:
- Changing buyer preferences towards more affordable property types
- Regional market resilience particularly in Northern Ireland and northern England
- Growing mortgage approval numbers indicating returning buyer confidence
- Market rebalancing after years of detached property dominance
As the property market continues to evolve in response to economic conditions, these latest figures provide crucial insights into how British homeowners and buyers are adapting to the new financial landscape.
