Demand for smaller homes has increased, indicating that the high cost of borrowing has prompted many homeowners to readjust their expectations.
Annual property price growth hit 1.9% in February1 – a significant improvement on -4.1% which was recorded last October. Smaller properties were a key driver of this uptick, with annual growth for flats and terraced houses reaching 2.7% and 2.6% respectively in February.
Many of the homeowners settling for smaller homes are first-time buyers, 57% of whom purchased flats or terraced houses last year. The strain has been particularly felt in London where property prices are highest, as 90% of FTBs in the capital bought a smaller home in 2023.
Your home may be repossessed if you do not keep up repayments on your mortgage
1 Halifax
