The Fading Appeal of Apartment Living: Why Homebuyers are Shifting Away from Flats
The market for single-story properties is currently experiencing a downturn, with a notable percentage of apartment owners being compelled to sell their units for less than their original purchase price. This trend points to a broader shift in buyer preferences within the housing market, where single-level living spaces are losing their former appeal.
Detailed Report: The Decline in Apartment Demand and Its Impact on the Housing Market
In a revealing analysis by estate agent Hamptons, exclusively shared with This is Money, it has been observed that as of 2025, approximately 22 percent of apartment sellers have divested their properties at a lower value than what they initially paid. This figure is more than double the average rate seen across the entire housing sector. Further data from Property Data, an analytics firm, indicates that in London alone, between October 2024 and June 2025, 24 percent of flats were sold for less than their acquisition cost. These statistics highlight a significant decline in the desirability of apartments, which constitute over six million residences, including maisonettes, across England and Wales.
Historically, apartments served as a crucial entry point for young individuals onto the property ladder in expensive urban areas, or as a practical option for retirees seeking to downsize and remain close to social networks. Many landlords also found flats to be attractive for their buy-to-let portfolios. However, this perspective appears to be changing, leading many recent purchasers to reconsider their investments.
A growing disparity between the cost of apartments and houses has become evident over the past decade. In June 2015, the average apartment price was £161,000, compared to £218,000 for a house, marking a £57,000 difference. By 2025, these figures have shifted to £191,000 for an apartment and £321,000 for a house, widening the gap to £130,000. This means the price difference, which was 30 percent in 2015, has surged to 51 percent in 2025. Zoopla reports that the typical house-to-apartment price ratio has escalated from 1.35 to nearly 1.7 in just ten years. Official figures from the Office for National Statistics further support this trend, showing only a 0.3 percent increase in average apartment prices over the last 12 months, contrasting sharply with increases of 4.1 percent for terraced houses, 5 percent for semi-detached homes, and 4.4 percent for detached properties.
Aneisha Beveridge, Head of Research at Hamptons, attributes this challenging period for apartments to a combination of structural issues and evolving buyer preferences. Several factors contribute to this waning interest. Apartments often come with considerable service charges and ground rents, which can deter potential buyers. While new leaseholds are now exempt from ground rents, many existing properties continue to incur these expenses. Service charges, in particular, have reached alarming levels in some urban apartment complexes, leading to buyer hesitancy. Jo Eccles, founder of Eccord, a prime central London buying agency, notes that buyers are increasingly cautious of these often-uncontrolled costs. The average annual service charge for an apartment in England and Wales reached £2,300 in 2024, an 11 percent increase from the previous year, according to Hamptons.
The sector has also been impacted by significant issues such as the cladding crisis and reforms to the leasehold system, which, despite offering some improvements for new leases, have underscored inherent problems. Jonathan Hopper, a buying agent, believes these factors have created a stigma around leasehold properties, causing a decline in their market appeal. The lingering effects of the pandemic, which spurred a demand for larger homes with outdoor spaces, further diminished the allure of apartments.
Richard Donnell of Zoopla explains that apartments have underperformed because buyer priorities have shifted towards greater living space and a heightened awareness of ongoing costs. Furthermore, financial challenges and the high expenses associated with moving are prompting some first-time buyers to save more and bypass apartments entirely, opting instead for houses as their initial property purchase. This strategy allows them to secure a home they can grow into, minimizing future moving costs like stamp duty.
Eccles also observes that buyers are less inclined to consider apartments as their first home. She notes a trend where individuals, particularly in London, are skipping the apartment stage to directly purchase family homes due to prohibitive stamp duty costs. This has led to reduced demand for flats, while supply concurrently increases. Personal considerations also play a role, as first-time buyers, entering the market later in life, often require homes that can accommodate a family immediately. Beveridge emphasizes that the desire to 'future-proof' their living situation means apartments are no longer the automatic first step into homeownership.
Compounding the issue is the trend of new-build apartments becoming smaller, while houses are generally increasing in size. A Nationwide Building Society report indicates that while the average property size slightly increased between 2013 and 2023, the average apartment size decreased by 1.7 percent over the same period, now standing at 60.3 square meters. Investor demand for apartments has also plummeted, with landlords purchasing only 14 percent of flats sold this year, a sharp drop from 25 percent in 2015.
Consequently, many apartment owners face not only depreciating values but also longer selling times. Hamptons reports that apartments take an average of 20 days longer to sell than houses. Sellers are also often forced to offer deeper discounts, with apartments in England and Wales achieving only 93.9 percent of their asking price in July, compared to 95.7 percent for houses. This discount gap has been consistent since 2017.
While the price gap between flats and houses tends to be narrower in city centers, especially London, where apartments are prevalent, even these areas are not immune. In London, the average apartment price has barely increased by 1 percent since 2017, while terraced houses have seen a nearly 20 percent rise. Examples abound of apartments in prime locations selling below their previous transaction prices. In contrast, flats in rural areas, often conversions, are less common and typically valued lower relative to local average house prices, as seen in regions like Breckland, Fenland, Melton, Powys, and Boston, where the price gap can exceed 50 percent.
The current market dynamics present a clear picture of shifting preferences and economic realities influencing the demand and valuation of single-story residential properties.
The current downturn in the apartment market serves as a crucial reminder for both prospective homeowners and investors to conduct thorough due diligence. It highlights the importance of considering long-term value retention, particularly in light of evolving societal preferences and increasing running costs. This situation underscores a broader reevaluation of housing needs, emphasizing space, affordability, and the potential for capital growth over initial entry price. For policymakers, it suggests a need to address issues such as service charges and leasehold complexities to restore confidence in this segment of the housing market.