Finance

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.

In a significant shift impacting household finances, credit card companies are progressively tightening the terms of balance transfer offerings. A recent analysis by the consumer advocacy group Fairer Finance indicates that these deals are becoming notably less advantageous for borrowers. The changes involve a dual squeeze: an increase in borrowing costs and a substantial reduction in the duration of interest-free periods, making it harder for individuals to manage and reduce their existing credit card debt effectively.

Historically, balance transfer cards have served as a crucial instrument for consumers aiming to mitigate the financial burden of high-interest debt. By enabling the transfer of an outstanding balance from one card to another, these deals typically provided an initial period during which no interest accrued, allowing borrowers to concentrate solely on principal repayment. However, the landscape is rapidly evolving, with lenders now structuring these products in a way that diminishes their appeal and increases the overall cost to the consumer.

Fairer Finance's research highlights a clear trend: the average interest-free period offered on balance transfer cards has shrunk from 20 months three years ago to just 18 months currently. This reduction compels consumers to accelerate their debt repayment efforts or risk rolling over into much higher annual percentage rates (APRs) once the promotional period concludes. The consequence of failing to clear the transferred balance within this shorter window is a rapid accumulation of interest, making debt eradication a more formidable challenge.

Compounding the issue of shorter interest-free terms is the rising cost of borrowing. The average representative APR, which applies after the interest-free period, has seen a sharp increase. Starting at an average of 23.36 percent in the first quarter of 2022, it surged to 28.8 percent by April to June of the current year. This escalation in APRs is particularly concerning given that it has occurred despite several base rate cuts during the same period, suggesting that lenders are independently adjusting their pricing strategies.

Moreover, the fees associated with balance transfers are also on an upward trajectory. The one-time fee charged for transferring debt between cards has climbed from an average of 2.18 percent at the beginning of 2022 to 2.67 percent today. These increased fees, combined with higher APRs and shorter interest-free periods, collectively make balance transfer cards a less cost-effective solution for debt management than they once were.

For instance, First Direct has reduced its interest-free balance transfer offer from 27 months to 20 months, concurrently increasing its transfer fee by 0.7 percentage points. James Daley from Fairer Finance emphasizes the need for consumers to be more vigilant than ever. He advises shopping around and understanding that the generous terms of the past are no longer standard. He also cautions that the advertised rates and promotional periods may not be guaranteed, as many lenders now tailor offers based on individual credit checks.

Despite the overall tightening of terms, some competitive offers still exist. Tesco Bank, for example, offers an 18-month interest-free period with a lower transfer fee of 0.99 percent and a representative APR of 24.9 percent. Similarly, Virgin Money provides a 20-month interest-free period with a 2 percent transfer fee and the same APR. For those seeking even longer interest-free periods, Virgin Money also has a 30-month option, though it comes with a 2.45 percent transfer fee. Fee-free options from NatWest and Santander offer 12-month interest-free periods, albeit with a shorter promotional window.

The evolving landscape of balance transfer credit card deals necessitates a more strategic approach from consumers. With shorter interest-free periods, higher APRs, and increased transfer fees, effectively managing debt now demands careful planning and a thorough comparison of available products. Borrowers must prioritize clearing their debt within the promotional period to avoid the significantly higher costs that apply afterward, as conventional credit card interest rates remain a particularly expensive form of borrowing.