Demand for smaller homes driving property price growth

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Annual property price growth reached 1.9% in February this year, having slumped as low as -4.1% in October 2023

Demand among buyers for smaller homes helped to drive growth in UK property prices in the early months of 2024, as per the latest research by Halifax.

At a national level, annual property price growth reached 1.9% in February this year, having slumped as low as -4.1% in October 2023. In cash terms, prices are up by £5,318 over the last year and are only £7,801 below the high logged in August 2022.

Despite the challenging economic environment, such is the growth seen in property prices over recent years they remain 19.9% (£47,573) above pre-pandemic levels. By comparison, in the four years prior to March 2020, they increased by just 13.4% (£28,027).

Halifax’s data shows that as rates stabilise and activity starts to rise, it is smaller homes that have logged the strongest increases in price growth in the early part of this year, as buyers adjust their expectations to compensate for higher borrowing costs, as well as coping with the general cost of living squeeze.

Key to this has been a resilient first-time buyer market. While the overall number of first-time buyers is lower than recent years, they made up 53% of all homes bought with a mortgage in 2023 – the highest proportion since 1995.

Flats and terraced houses made up 57% of all homes bought by first-time buyers last year. Nevertheless this varies hugely by region. For instance in London, which has the highest average property price in the UK by some margin, flats and terraced homes account for 90% of all first-time buyer purchases.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Invest for Property. The information provided on Invest for Property is intended for informational purposes only. Invest for Property is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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