New data from Nationwide reveals that terraced houses have outperformed other property types in terms of capital appreciation over the last 12 months, with average prices rising by 3.5%. This is higher than the increases seen for semi-detached homes (2.8%), flats (2.7%), and detached houses, which saw more modest growth of 1.7%.
Terraced houses take the lead
Nationwide’s latest figures highlight the strength of terraced houses in the current market. The 3.5% price rise for terraced homes marks them as the top-performing property type over the past year. In contrast, detached houses, while historically commanding higher prices, have seen slower growth recently, increasing by just 1.7%.
Robert Gardner, chief economist at Nationwide, explains: “If we look over the longer term however, detached homes have continued to have a slight edge over other property types, most likely due to the ‘race for space’ seen during the pandemic. Indeed, since Q1 2020, the price of an average detached property increased by nearly 26%, while flats have only risen by circa 15% over the same period.”
UK house prices rise in September
Overall, UK house prices grew by 0.7% in September after seasonal adjustments, with the annual rate of growth climbing to 3.2%, the fastest increase since November 2022. However, house prices remain around 2% below the all-time highs recorded in summer 2022.
Gardner adds, “Income growth has continued to outstrip house price growth in recent months while borrowing costs have edged lower amid expectations that the Bank of England will continue to lower interest rates in the coming quarters. These trends have helped to improve affordability for prospective buyers and underpinned a modest increase in activity and house prices, though both remain subdued by historic standards.”
Long-term trends and investor considerations
The data underscores a longer-term trend where detached homes, buoyed by the demand for space during the pandemic, have seen substantial price increases since early 2020. Despite the more recent surge in terraced house prices, detached properties have enjoyed a 26% rise over the last few years, compared to a 15% increase for flats.
For investors and landlords, the latest figures suggest that terraced houses may offer stronger short-term returns, while detached homes continue to hold their value over the long term. With income growth outpacing house prices and borrowing costs expected to ease, the market may see further positive momentum as affordability improves.
