Halifax has released data revealing an increase in value for the average UK apartment. Over the past five years, prices have increased by £1,252 per month, resulting in a rise of £75,074 over the period.
Although the proportion of apartments in relation to home sales makes up just 15%, the Halifax data shows that such accommodation is becoming increasingly important in relation to urban labour markets. The data shows an increase by 48% in the value of apartments between 2013 and 2018. Terraced houses also saw an increase, but not by as much, at 42%, and detached homes only increased by 27%.
Jonathan Stephens, Managing Director for Surrenden Invest, said: “The sustained level of demand for apartments in regional city centres has shown solid credentials, even in the wake of the Brexit referendum. With dynamic local economies and solid labour markets, regional cities are an enticing prospect for those looking to make capital gains, whether as owner-occupiers or investors.
“In fact, the majority of investors we work with now come to us with a regional city firmly in mind – London has lost its shine as a residential investment prospect as the UK’s other cities are producing better returns.”
The latest House Price Index from Halifax shows home values to have risen during May by 1.5%. The lender has pointed out that two reasons for this include the recent performance of the labour market, as well as low interest rates.
Russell Galley, Managing Director of Halifax, has commented: “The continuing strength of the labour market is supporting house prices. In the three months to March the number of full-time employees increased by 202,000, the biggest rise in three years. We are also seeing pay growth edging up and consumer price inflation falling, and as a result the squeeze on real earnings has started to ease. With interest rates still very low we see mortgage affordability at very manageable levels providing a further underpinning to prices.”
The UK population is expected to exceed 70 million by mid-2029, and there is a steady increase of urbanisation reported by market research company Statista, with it sitting at 82.84% in 2016, up from 80.2% in 2006. This may result in the demand for city centre apartments to remain consistent for the next few years. With apartment prices increasing at a rate faster than those of other accommodation types, they may continue to be a popular choice for investors.