After the property market slump during the first national lockdown in the UK, there has been a mini property boom as people re-assess where they want to live. We have seen a surge of people moving from city centres to more rural areas and there has been the added incentive of the stamp duty holiday.
Despite this mini boom in house purchases, flat sales, which have traditionally done rather well have started to struggle. Between 2011 and 2019 flats in London, for example, saw prices increase at a faster rate than any other type of property, but over the last year this trend has reversed and flats have struggled to maintain their market attractiveness. According to the Financial Times, only 27% of flats are finding purchasers and are typically taking twice as long to sell as houses but why is this?
Why is the flat market a bit, well, flat?
The first reason is that there has been a drop in the number of first-time buyers who would typically buy a flat as their first home. The issue is that mortgage lenders have removed a large number of the high loan to value mortgages from the market in an attempt to reduce risk, meaning that first time buyers have to find a larger deposit to finance a home purchase and this has effectively, temporarily priced them out of the market.
The second reason is that, during the lockdown, people were forced to work from home and were limited to just one hour a day outdoor exercise permitted. This has led to many people completely re-assessing what they want from a property and it would seem that living in smaller homes with no outside space has become a lot less attractive, despite the often prime locations flats enjoy. More people are prioritising a garden and a space for home working, than proximity to town and city centres, when considering a new home purchase. This is having a major knock-on effect on the large town and city flat market as few flats have their own outside space and they also tend to be smaller than houses which makes working from home comfortably more challenging. People are looking more to the future and making sure that, should something like this pandemic happen again, they will have enough space to cope.
It is not all bad news for flats
There is some light at the end of the tunnel for flats, though. As the pandemic eases and the vaccine is distributed, life will of course return to a semblance of normality, higher LTV mortgages will come back on the market which will open things up once again for first time buyers and the appeal and the convenience of flat life will once again return. Add to this the probable lower prices for flats and it is likely that flats will become a more attractive proposition during 2021.