Price gap between houses and flats hits a 30-year high as buyers prioritise bigger homes

The price gap between houses and flats has hit a 30-year high, according to latest data from Zoopla.

The property portal revealed the average house value is now £319,500, which is 67 per cent higher than the average value of a flat at £191,300.

Over the last five years, the average value of a flat has increased by 7 per cent compared to house values increasing by 24 per cent.

A glut of flats on the market combined with a buyer preference for houses is driving the price gap even wider between the two property types.

The early weeks of 2025 saw a 14 per cent in the number of flats on the market, with a more modest increase of 5 per cent in the number of houses for sale.

Zoopla says flats now account for one in four homes currently for sale.

The increase in the number of flats for sale is running well ahead of the growth in new sales agreed at just 4 per cent and buyer enquiries, up only 1 per cent.

In contrast, the demand for houses is 16 per cent higher than a year ago, while the available supply is just 5 per cent higher.

This mismatch in supply and demand explains why values of flats have risen by just 0.5 per cent in the last year, with house values up 2.2 per cent, according to Zoopla.

However, experts say house values are unlikely to rise faster given the greater choice of homes for sale overall and the extra stamp duty costs for many buyers that will come into play from 1 April.

Zoopla also says that many of owners of the flats that are for sale are facing smaller capital gains than owners of houses.

Two in five flats for sale have an asking price less than £20,000 above the original purchase price compared to just 6 per cent of houses.

In fact, 15 per cent of flats listed for sale have an asking price that is below the price they were previously bought for.

Whilst flats are better value for money, buyers are still prioritising houses, especially first-time buyers, according to Zoopla.

Its data shows that over half of first-time buyers looking to buy today, outside London want a three-bed house. This is up from 44 per cent in 2017.

Demand for one and two-bed flats has declined from 25 per cent to 17 per cent over the same period.

The search for space over the pandemic boosted demand for houses more than flats and this trend is yet to reset.

There are also concerns over running costs for flats. These include escalating service charges and ground rents, as well as fire safety concerns for some newer flats.

More than half of leaseholders are now paying more each year on their service charge than they do on council tax, analysis by Hamptons recently revealed.

The average annual service charge bill for a flat in England and Wales hit £2,300 in 2024, an 11 per cent increase on the previous year, according to the estate agent Hamptons.

This dwarfed the 2.5 per cent rate of inflation in the 12 months to December 2024 - the rate at which the cost of goods and services goes up on average.

Richard Donnell, executive director at Zoopla said: 'The housing market remains resilient with more people looking to move home in 2025 and 2026 than this time last year.

'Average earnings rising by six per cent over the last year, well ahead of inflation, is boosting buyer confidence and helping to reset housing affordability.

'Flats have become even cheaper compared to houses over the last five years.

'Buyers are still prioritising houses over flats but there are opportunities for canny buyers prepared to do their homework and weigh up the purchase of a flat rather than potentially waiting longer to buy a house.

'While market activity is on the rise we expect house price growth to be kept in check over 2025.

'There has been a sizable increase in homes for sale in the early weeks of the year which is giving buyers greater choice and stronger negotiating power.

'Higher stamp duty costs for many from April will keep a lid on prices which we expect to increase by 2 to 2.5 per cent with above average growth in more affordable markets outside southern England.'

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