Flats are once again trendy as first-time buyers look to smaller homes in a bid to buy in the capital.
London flats are back in fashion after falling hugely out of favour during the pandemic “race for space”.
The release of pent-up demand from first-time buyers who put off buying decisions during Covid lockdowns, combined with spiralling rents as London fills up again with workers, has sent demand for smaller homes soaring.
According to one survey, flat prices are outpacing the overall property market in five London boroughs — Barking and Dagenham, Greenwich, Newham, Hackney and Tower Hamlets — in a striking reversal of the trend of the last two years.
In eight other boroughs — Wandsworth, Lambeth, Southwark, Waltham Forest, Lewisham, Islington, Hammersmith and Fulham and Westminster — flat price rises have almost caught up with the overall market.
“London is on manoeuvres once again. There’s been no exodus. In fact, many younger buyers chose to rent while the dust settled on the pandemic, and that’s the main reason why the lettings market has been red hot.
“These buyers, who put their purchases on hold, are being confronted by the reality that borrowing costs are going up. Many of them are first-time buyers who are desperately playing catch-up. We expect the prices of flats in London to put in a robust performance in 2022 for this reason.”
Flats without outside space became increasingly hard to sell during the pandemic as buyers sought larger homes with gardens.
In the year to September prices of London flats only inched forward 0.74 per cent on average, compared with a 4.92 per cent rise for terrace houses, 7.33 per cent for semi-detached homes, and 9.18 per cent for detached houses.
However, Rightmove says it has seen the same marked flip-flop in the trend over recent months. It has seen a bigger increase in demand for flats — 27 per cent last month compared with last year — than for any other property.
Rightmove’s Tim Bannister said: “This coincides with the renewed demand to live in London, after it temporarily dropped due to restrictions this time last year.”