Homebuyers are becoming increasingly interested in smaller properties as mortgage affordability has made it more difficult for first-time buyers (FTBs) to get on the property ladder.
Due to the surge in interest rates over the last couple of years, FTBs have been unable to afford to pay steep mortgage fees or raise a high enough deposit to bring the monthly costs down.
Therefore, instead of remaining in rented accommodation or living with parents for longer, many have decided to look for smaller homes instead of holding out for larger ones.
As a result, apartments have seen a rise in demand, with Halifax reporting that the value of flats has increased the most since the start of the year.
This has helped in “closing the ‘growth gap’ on bigger properties that’s existed for most of the last four years”.
Amanda Bryden, head of mortgages at Halifax, stated: “[FTBs have been] compensation for higher borrowing costs by targeting smaller properties.”
It is likely that mortgage affordability will continue to be a problem for some time, which means FTBs will continue to look for smaller houses and apartments to purchase.
This increase in demand will see the prices of these properties continue to rise, so homebuyers keen to get keys to their first home should get in touch with their local estate agents sooner rather than later.
Despite the volatile market, property values have still risen over the last year, increasing from an average of £285,843 to £288,949 between April 2023 and 2024.
Steadying mortgage rates and strong buying activity at the higher end of the market are pushing up demand for properties and, therefore, their prices, which means FTBs cannot afford to wait if they want their own home.
