Flat prices fell 0.5% over the past year while detached houses rose 2.4%, according to Nationwide data that highlights a widening gap between property types with significant implications for landlord portfolios.
The divergence has accelerated since 2020, with flat values rising just 15% compared to 30% for detached properties. For landlords with flat-heavy portfolios – particularly in London and the South East – the figures raise questions about long-term capital growth strategies.
Regional winners and losers
Northern Ireland led all regions with prices up 9.5% year-on-year in Q1 – nearly three times the 3.3% recorded in the North West, England’s strongest performer. At the other end, the Outer South East saw prices fall 0.7%, while East Anglia declined 0.4%.
London posted modest growth of 1.7%, up from 0.7% in the previous quarter. Nationwide attributed the capital’s relative weakness partly to its higher proportion of flats.
Overall, the Nationwide house price index showed annual growth of 2.2% in March, with average values reaching £277,186.
Geopolitical shock clouds outlook
Robert Gardner, chief economist at Nationwide, warned that the Middle East conflict had changed the picture significantly. “The sharp rise in global energy prices represents a significant shock to the economy. In the near term, UK economic growth is likely to be slower and inflation higher than previously expected.”
Financial markets now expect three interest rate increases over the next twelve months, compared to two cuts anticipated before the Iran strikes. This follows Residential Landlord’s report on lenders pulling hundreds of products as swap rates climbed.
“If sustained, this could reverse some of the improvement in housing affordability that has taken place in recent years,” Gardner said.
Portfolio implications
Nathan Emerson, chief executive of Propertymark, urged caution despite the headline growth. “This upward movement must be viewed in context. Affordability remains stretched by historical standards, and any renewed pressure on inflation that may also affect base rate decisions could quickly temper this momentum.”
This follows Residential Landlord’s analysis of lender retreat from the market, which highlighted building supply pressure as financing conditions tighten.
Opinion
The flat versus house divergence deserves more attention than the headline 2.2% figure. Landlords who bought city centre flats a decade ago have seen their capital growth lag houses by half. With service charges rising, EPC requirements looming, and cladding issues still unresolved in many blocks, the case for flat ownership looks increasingly weak. Those with flexibility should consider whether rebalancing toward houses makes sense – even if it means moving into less familiar markets.
