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Stop thinking small and start building big

Differentials in price increases between flats and houses are at the centre of new Land Registry statistics on the housing market.

These figures show the growing problems flat dwellers are facing if they wish to move to larger properties.

The government has encouraged developers to build small flats on brownfield land.

Responding to the preference for urban living among certain demographic groups, it has used planning policies to encourage high-density developments in urban areas.

And although this is the type of development that perhaps most closely typifies the housing market in the London Docklands, small flats are no longer a phenomenon we only see in the capital.

In Manchester, the Beetham Tower has just been completed, while the iconic former office block in Birmingham, the Rotunda, is being converted into flats.

And even in cities that lack such landmark developments, their centres are full of small one and twobedroom flats targeted at young professionals.

This has changed the complexion of towns and cities throughout the country. As soon as any vacant urban land becomes available, in go the developers. Shortly afterwards, blocks of flats appear.

And it’s not just the architecture of Britain’s towns and cities that is changing, but their eco-nomies as well.

As a consequence of affluent consumers living in such areas, they now often feature restaurants and shops that serve the inhabitants of the new flats. There is a market for such properties and for many people they are attractive places to live. However, with supply running so high, it’s hardly surprising that reports are coming in of falling demand and de-clining values.

This will come as no surprise to an informed readership such as that enjoyed by Mortgage Strategy.

Stories have em-erged of falling prices and of developers using a range of tactics to try to maintain values. This has led a number of major lenders to reconsider their activities in areas dominated by flats.

Recent figures published by the Land Registry show that since 2000 the price of average detached homes has doubled to 313,000, while the price of flats has increased by only 11% to 188,000.

Over this period, the numbers of houses being built has fallen, with 21,000 fewer constructed last year compared with 2000.

By contrast, the numbers of flats being built has risen from 23,626 to 56,823 a year.

So it’s hardly surprising that at a recent Building So-cieties Association event, there was talk of affordability problems for those trying to move up the housing ladder.

People who own small properties are struggling to upgrade to larger ones.

If people want to live in urban flats, it is right that such properties are being built for them.

But the government needs to recognise that it’s pointless to continue building such properties, which are often left empty, when the market is crying out for larger houses.


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