Shortage of smaller homes pushes prices higher
Property valuation website Hometrack has reported that the current short supply of homes for sale is especially severe in the category of one-bedroom properties. In a recent report, Hometrack said that two-thirds of available properties are “family” homes with three or more bedrooms. One-bedroom homes, on the other hand, make up only 3 percent of the existing stock in England and Wales. That amounts to 800,000 properties. Only 10 percent of new homes built in 2006 were one-bedroom properties.
These circumstances have led to rising prices at the bottom end of the housing ladder due to strong demand from both first-time buyers and investors. Prices for one and two-bedroom homes are being pushed up toward the price of three-bedroom properties with demand for the smaller homes outstripping supply. The current difference between the average price for a one-bedroom home, at £141,000, and a three-bedroom home, currently averaging £194,000, is much smaller than it was in the early 1990s.
The rising prices for and lower availability of smaller homes, while a problem for new families looking to buy their first home, is also an issue for homeowners who are interested in trading down to a smaller house after the children have grown up and moved out on their own, according to Hometrack.