The average price of flats has dropped by more than 7% in the last year in some areas of the UK, according to research from Gatehouse Bank.

The lender found that, while overall the cost of flats has risen by a modest 0.95% over 12 months, it’s going up nearly four times slower than the cost of houses.

This may not be great news for flat owners, but it is a ‘boon for first-time buyers trying to buy their first home’, said Gatehouse, especially where there have been significant price falls in key commuter towns.

Opportunity to buy

Land Registry data shows Aberdeen is offering the biggest discount year-on-year, with the price of flats in the Scottish city dropping annually by 7.5%.

The price of flats in St Albans decreased by 5.3% and in Middlesbrough they fell by 4.6%.

Falling prices are likely to be linked to government schemes supporting first-time buyers combined with falling demand from landlords. The Help To Buy scheme and Stamp Duty Land Tax relief have effectively boosted the budgets of first-time buyers who can afford to stretch themselves to larger properties.

Fewer sales

Transactions of flats have dropped 20.6% in the past two years, falling from 196,273 in 2016 to 155,801 in 2018. Over the same period, sales of semi-detached homes fell only 1.1% to 247,8532.

Charles Haresnape, CEO of Gatehouse Bank, said: “Affordability is a significant issue for those looking to take their first step on the housing ladder, so our research provides some positive new for those struggling to find their first home.

“Flats appear to have fallen from favour to a degree over the last year, but some buyers are inevitably going to take advantage of this opportunity.

“Our research shows that the value proposition of flats in these areas is changing far more rapidly than it is for larger properties and this is likely to prove tempting to many prospective purchasers in the coming months.”