Shortage of smaller homes pushes prices higher

| June 12, 2007 | 0 Comments
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.

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