The UK's flat market has been left in a precarious position, struggling to recover from years of declining popularity among first-time buyers and private investors alike. According to Andy Hill, CEO of major housebuilder Hill Group, revitalising the sector is crucial for the overall growth of the housing industry. A significant divergence between flats and houses in terms of average price growth since 2016 only adds weight to his concerns.
Data from Zoopla reveals that while the average UK house price has surged by 43% over the past five years, flat prices have seen a more modest increase of just 10%. This trend suggests a clear shift in buyer preferences towards smaller houses outside urban areas, rather than apartments in city centres. Hill points to lingering fire safety concerns and dissatisfaction with the leasehold system as key factors contributing to this decline.
He stresses that enhancing product quality is essential for meeting evolving buyer expectations, particularly following the pandemic's impact on living preferences. The Hill Group has committed to ensuring all new flats include private outdoor space, a feature deemed crucial in post-Covid times. However, re-establishing the appeal of apartment living will be critical if the UK is to meet its housing delivery targets.
Given the importance of high-density developments near transport hubs, especially in densely populated urban areas, Hill warns that without making apartment living more desirable, new home construction – particularly in these areas – will be significantly hampered. This warning comes amidst a resilient wider UK housing market and increased investment in the 'build-to-rent' sector, with £2.2 billion committed in the second quarter alone.