A decade or so ago, most people’s first home would have been a petite flat in a city or town. It would be slowly over time that they climbed the property ladder, upgrading to a small family home. But not any more.
These days flat’s have fallen from grace with first time buyers who are more keen to leapfrog up the property ladder. While they are happy to rent a flat, when it comes to buying their first home they are more likely to skip straight to a house.
This insight comes after the Land Registry found that the average cost of a flat has fallen by 1.6 per cent in the last year. In contrast, every other type of property from terraced houses to detached houses has increased in value.
Detached houses have seen the largest year-on-year gain, increasing in value by 2.7 per cent. Semi-detached homes closely followed this, increasing by 2 per cent and terraced homes by 1.9 per cent.
Experts believe that this comes as a result of first-time buyers no longer jostling with investment landlords to get on the bottom rung of the property ladder and purchase a flat as their first home.
Instead, because the average age of when people can buy their first home is on the rise. When it comes to their first home they are searching for properties that will accommodate a young family, which a flat rarely will.
Moreover, by delaying buying a home until they can afford something bigger than a flat could save would-be homeowners money. First-time buyers are exempt from stamp duty on the first £300,000 of a property purchase, but this doesn’t apply when you are moving up the ladder.
By holding off on buying a flat and instead jumping straight to a semi-detached house costing around £216,938, first-time buyers could save £1,838.76 in stamp duty.
If you’re still trying to wrap your head around how a first time buyer can leapfrog up the property ladder when so many are struggling to get on to it in the first place, that is largely thanks to the Help to Buy scheme.
Under this loan, people have been able to purchase a new-build property with just 5 per cent of the deposit. The government then tops this up with a five-year interest-free loan.
In most parts of the UK since the average semi-detached home costs 9 per cent more than a flat, the loan would be an enough to jump up to the property ladder.
If you’re looking to buy a home, will you be investing in a flat or something a little bigger?