The demand for smaller homes has surged, reflecting the high cost of borrowing and prompting many homeowners to adjust their expectations.
In February, annual property price growth reached 1.9%, a notable recovery from the -4.1% recorded in October of the previous year. This growth has been significantly driven by smaller properties, with annual growth for flats and terraced houses hitting 2.7% and 2.6% respectively.
First-time buyers are particularly contributing to this trend, with 57% of them opting for flats or terraced houses last year. The impact is especially pronounced in London, where property prices are highest. In 2023, 90% of first-time buyers in the capital purchased smaller homes.
As property prices continue to rise, the trend toward smaller homes is likely to persist, highlighting the need for buyers to remain flexible in their housing expectations.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Source: Halifax
