The North East Embraces the Small Home Boom

22nd May 2024
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Budget concerns impact bueyrs but small is also beautiful

For homeowners in the North East considering putting their properties on the market, the latest data from Halifax brings encouraging news. As the housing market continues its recovery from the challenges of 2023, smaller homes have emerged as the standout performers, experiencing the strongest price growth in the early months of this year.

On a national level, annual property price growth reached an impressive 1.9% in February, a remarkable rebound from the low of -4.1% recorded in October 2023. In cash terms, prices have risen by £5,318 over the past year, and now sit just £7,801 below the peak levels witnessed in August 2022.

Despite the economic headwinds faced in recent years, the resilience of the housing market is undeniable. Property prices remain a staggering 19.9% (£47,573) above pre-pandemic levels, a stark contrast to the modest 13.4% (£28,027) increase observed in the four years leading up to March 2020.

Smaller homes drive property market activity

Halifax's data reveals a fascinating trend: as mortgage rates stabilise and market activity picks up, it's the smaller homes that have recorded the strongest price growth in the early part of 2024. This shift is attributable to buyers adjusting their expectations to compensate for higher borrowing costs and the broader cost-of-living pressures.

A key driver of this trend is the resilience of the first-time buyer market. While the overall number of first-time buyers may be lower than in recent years, they accounted for an impressive 53% of all homes purchased with a mortgage in 2023 – the highest proportion since 1995.

Flats and terraced houses have proven particularly popular among this demographic, making up 57% of all first-time buyer purchases last year. However, regional variations are significant, with flats and terraced homes accounting for a staggering 90% of first-time buyer purchases in London, the region with the highest average property prices in the UK.

Turning the spotlight to the North East, the data reveals a remarkable surge in demand for terraced houses. Prices for these properties have risen the most on an annual basis, climbing by an impressive 7.6% (£8,938). This trend is further reinforced by the strong long-term performance of terraced homes, with average prices up by 20.5% (£38,090) over the past four years.

While the demand for larger properties has eased, the North East has also witnessed notable growth in the semi-detached house market. This segment recorded the region's highest annual price increase at 5.9% (£10,381), outpacing most other areas of the country.

We are local experts here to help you make a move

As the housing market continues to evolve, the North East's embrace of smaller, more affordable property types positions the region as an attractive destination for prospective buyers. For homeowners in the area considering a sale, the current market conditions present a prime opportunity to capitalise on the surging demand for terraced houses, flats, and smaller properties.

By staying informed about these trends and tailoring their marketing strategies accordingly, North East homeowners can maximise their chances of achieving favourable outcomes in this dynamic and ever-changing housing landscape.

Amanda Bryden, head of Halifax Mortgages, said: “As interest rates have stabilised and buyers adjust to the new economic reality of owning a home, one way to compensate for higher borrowing costs is to target smaller properties. This is especially true among first-time buyers, who have proven to be resilient over recent years, and now account for the largest proportion of homes purchased with a mortgage in almost 30 years. We see this reflected in property prices for the first few months of this year, with the value of flats rising most sharply, closing the ‘growth gap’ on bigger properties that’s existed for most of the last four years.”

Nathan Emerson, CEO of Propertymark, said: “Whilst it is a positive sign for those hoping to sell their homes that property prices are rising, the market is still overwhelmingly expensive, especially for first-time buyers who are adapting their property choices based on current prices.”

Contact Anthony Jones for all Darlington property matters

If you are looking for help with any matter of the Darlington property market, it is best to speak to property professionals. No one knows for sure what is going to happen next, so we won’t claim to have all the answers, but the Anthony Jones team is keen to help you as best we can. If you would like to contact us over housing matters, please call us today on 01325 776424.

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