Sales of flats drive property market recovery

Demand for flats and apartments has increased as buyers look for a more affordable way to get on the property ladder or move home.

New data from property website Rightmove reveals that overall home sales have now returned to pre-pandemic levels for the first time since September last year, and flats have shown the strongest revival.

Sales of flats are currently 10% higher than they were in 2019, before the pandemic. Demand is even higher in London, where sales of flats are now 23% up on four years ago.

Typical flat purchasers

"This demand for flats is driven by professionals who wish to shorten their commute, parents who invest for their children but also overseas buyers who are taking advantage of favourable currency exchange rates," explained Robert Sturges, Central London area director at estate agency chain Chestertons.

"In the face of rising living costs, some buyers may also decide that a flat is financially more viable than a house at this moment in time.

"Another driving force behind the demand for flats are renters who review their finances amid rising rents and decide that, despite higher mortgage rates, buying presents a better option long-term. We are therefore seeing a number of first-time buyers entering the market."

First-time buyers

Separate research from estate agent Hamptons confirms that those looking to take their first step on the property ladder are now more likely to purchase a one- or two-bedroom home, and are increasingly choosing flats over houses.

It's a sign that, with demand outstripping supply in the rental market and borrowing costs high, prospective purchasers are still looking to buy but are opting for a smaller home, the Financial Times reported.

An analysis by Hamptons of transaction records from property sales network Countrywide shows that for the first time since 2010, most first-home buyers chose a one- or two-bedroom property in the first quarter of 2023.

"Most first-time buyers, once they have saved up their deposit, want to get on with their purchase," said Aneisha Beveridge, head of research at Hamptons. "Those who can afford to do so are carrying on buying, and compromising on size."

Return to pre-pandemic norms

The Rightmove data also illustrates the recovery in the wider property market in the first few months of this year.

In March, the number of sales being agreed was just 1% behind March 2019 compared with 21% behind 2019 at the start of the year.

Tim Bannister from Rightmove said that while there are regional differences across the country, it's a positive sign that sales at a national level are being agreed at the same rate as the last more "normal" market of 2019.

Bannister added that the level and size of price reductions on agreed home sales has also returned to the pre-pandemic norm.

Rightmove found that the average size of price reduction from first to last listing price is back to 6%, which is the equivalent of £22,000 based on the current national average asking price. It had dropped to 5% during the pandemic.

Around a third of properties see a price reduction now, up from 19% when the market became heated last year but in line with the pre-pandemic level of 34%.