Demand for more space drives price increases, while flats see slower growth
Increased demand for larger homes has driven growth in UK property prices over the past year, according to new research by Halifax.
Annual house price growth reached 3.7% in January 2025, up from 1% in early 2024, as easing interest rates improved mortgage affordability. The average UK property price increased by £10,431 to £294,818, surpassing the previous peak set in August 2022.
Price trends by property type
Data from the Halifax House Price Index highlighted differences in price growth across property types. Terraced houses saw the strongest annual increase at 4.5%, reaching an average price of £235,296. Detached properties followed, rising 4.1% to £471,748. Meanwhile, semi-detached homes grew by 3.8% to £307,685, and flats saw the slowest growth at 3.2%, averaging £168,569.
Flat prices fluctuated throughout 2024, peaking at 4.7% annual growth in October before slowing to 3.2% in early 2025. The average price of £168,569 remains slightly below its August 2022 peak. Regional differences were notable, with the North East experiencing the strongest growth at 15.1% (£13,141), while the East Midlands saw a small decline of 0.6% (£705).
Terraced homes led price growth for much of the past year, peaking at 5.7% in October. By January 2025, annual growth stood at 4.5%, adding £10,025 to the average price. The North East recorded the biggest increase at 8.4%, while Yorkshire and Humberside had the slowest growth at 2.7%.
Semi-detached homes saw prices rise by 3.8% over the past year, increasing by £11,367 to an average of £307,685. Northern Ireland recorded the highest annual growth at 7% (£11,835), while Scotland had the slowest at 0.7%.
Detached properties saw annual price growth of 4.1% (£18,704), bringing the average price to £471,748. This is higher than the pandemic peak of September 2022 (£471,333) but slightly below the record set in September 2024 (£472,984). Northern Ireland recorded the strongest growth in this segment at 15.2% (£35,857). London saw the weakest growth at 0.9%, but its detached homes remain the most expensive in the UK at £944,526 — nearly five times the average price in the North East (£190,757).
“The fortunes of different property types tend to ebb and flow depending on broader market conditions,” noted Amanda Bryden (pictured), head of Halifax Mortgages. “This time last year, the average price of a flat had risen more quickly than a detached house, as buyers adjusted to higher borrowing costs and sought to compensate by targeting smaller properties.
“Now, as interest rates have started to ease, it’s once again those homes offering more space which are fuelling demand.”
The first-time buyer market saw a resurgence in 2024, with 20% more buyers entering the market. Price growth was again strongest among larger properties, with terraced houses rising 3.5%, semi-detached homes increasing 2.9%, and detached houses growing 2.8%. Flats had the lowest growth at 1.8%. Flats remain a key entry point for first-time buyers, accounting for 27% of purchases. This varies widely by region, from 71% in London to just 4% in the East Midlands.
New build flats have outpaced the wider market, with annual price growth of 6.7% compared to 3.1% for all newly built homes. Other new build property types saw lower growth: terraced houses rose 3.6%, semi-detached homes 2.2%, and detached houses 2.4%. Buyers of new builds continue to pay a premium, with new homes costing an average of £33,514 more than existing properties. The gap is even higher for new build flats, which carry a £71,865 premium.
Widening price gap between property types
Since 2000, the price gap between property types has widened significantly. At the start of the century, a flat cost £49,905, while a detached home was priced at £132,671. By 2025, the average flat costs £168,569, while a detached house is £471,748.
Over the past five years, UK house prices have grown by 25.1%, slightly outpacing the 23.8% increase seen in the previous five years. Detached houses have seen the biggest rise, with prices up 29.6% since 2020, adding more than £100,000 in value. Flats have seen the slowest growth, increasing by 16.7% over the past five years compared to 22.3% in the preceding period.
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