The space race: why Covid could spell the death of apartments

The change in buyer demand during and following the pandemic has been widely documented: purchasers and renters want more space in rural areas to allow working from home, and somewhere to relax in the event of lockdown.

And now, it seems, this trend is being reflected in the way developers are planning, designing and building new schemes. NHBC statistics for Q3 2021 reveal that detached houses now make up the largest proportion of new home registrations in the UK. Not only that, but only 13% of all new home registrations in Q3 2021 were apartments; the lowest since Q1 2007.

Source: NHBC

The drop in demand for apartments is also reflected in their value growth during the pandemic. Rightmove have reported that flats have seen a price rise of just 1% since February 2020, at an average asking price of £277,302. In contrast, the price of a detached house has jumped by 10% over the same period, to £517,180, as over 60% of buyers reveal that their top priority when searching for their next home is access to a garden.

Further research from Rightmove has also shown that a third of buyers are looking for their next home in a more rural area, as trends amongst renters also move away from studio apartments towards two-bed houses. This switch in demand has been reflected in property prices, with data from the ONS in January 2021 showing that annual price growth for rural properties is now equal to those in rural areas.

Source: ONS

Indeed, over the past ten years, property price growth in houses has outgrown apartments in all regions of the UK, with bungalows experiencing a somewhat surprising resurgence, as buyers seek additional outdoor and indoor space.

Whether demand for apartments will rise as the memories of the pandemic fade remains to be seen; will buyers and renters gravitate back towards city centres, or remain in rural areas? Will developers continue to design more houses on future schemes to boost revenues? And will this shift in demand translate to a flattening of rental prices?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: