Where can you get more space for your money?
Which homes offer the best value when it comes to price per square foot? Let’s take a look at the property types and locations that offer more bang for your buck.
Different ways of looking at property size
Buyers in the UK tend to focus on the number of bedrooms a property has when deciding what to buy.
But beyond the British Isles, the cost of floor space is the big deciding factor for home movers.
Looking at a home’s asking price per square foot (sq ft) is a logical way to assess its value for money, which is increasingly important in today’s affordability-challenged times.
Price per sq ft also deals with the challenge of homes and bedrooms coming in different shapes and sizes.
Some homes will have extra receptions, bathrooms and storage all adding to the total floor space, meaning the largest 3-bed semis can have 55% more space than the smallest ones.
Many buyers only find out about these differences during the viewings, whereas comparing homes on a price per sq ft basis can help you eliminate the ones that are simply too small and save you precious viewing time.
Average price per sq ft of different property types
While differences in the amount of floor space in homes can be subtle, the variations in price can be significant.
Looking at the cost per sq ft allows you to easily compare the value for money offered by each property type.
Which properties offer the best value in terms of space?
Our research finds that terraced homes offer the best value for money.
The price per sq ft of a terraced property ranges from £225 for a 2-bed to £235 for a 4-bed house.
Detached and semi-detached homes come with a higher price tag per sq ft but tend to offer more space and external features, such as off-street parking options.
Flats are often seen as offering the least value for money. However, that’s not always the case.
Outside of London, the average of a 2-bed flat is £245 per sq ft. That’s 9% lower than the average price of a 2-bed semi-detached house (£270 per sq ft).
Having said that, in the North West, Wales and London we find flats are some of the most expensive options when measured by cost per sq ft.
This is likely due to a rise in new developments featuring plenty of amenities in the cities of London, Manchester and Cardiff.
Most expensive areas per sq ft of property
In reality, what someone pays for a unit of space will vary by region as well as property type.
Outside of London, the average price per sq ft of property is £260. This means the space taken by a double-bed typically costs around £7,176 on average.
In London, that figure more than doubles to £585 per sq ft, meaning a double bed’s worth of space would cost £16,146.
However, buyers looking for a home in areas such as Erith (DA8), eastern Dagenham (RM10) and Belvedere (DA17) can pay less than £400/sq ft.
Those searching in neighbouring regions in southern England will pay £295 per sq ft, with prices rising to £295 in the South West and £375 in the South East.
Key takeaways
- The average UK home costs £300 per square foot
- A standard size double bed takes up 27.6 sq ft, costing buyers £8,280 on average
- Hartlepool is the cheapest area to buy when looking at pounds per square foot at £118 compared to Kensington and Chelsea at £1,373
- Homes in Inverclyde have seen the biggest percentage increase outside of London: up 13.2 per cent since 2023
- Terraced homes offer best value for money, ranging between £225 for a 2-bed and £235 for a 4-bed
- The average price per square foot ranges between £145 in the North East and £585 in London
- Historical seaside resorts and port towns offer the lowest prices, with Portsmouth, Plymouth, Dover, Great Yarmouth and Queensborough sitting at 38 to 45 per cent below their regional averages
Two fifths of workers unable to access home ownership in Great Britain
New report explores the affordability of housing to rent and buy across Great Britain.
In-depth analysis into the affordability of housing to rent and buy
Research team have published a new, comprehensive analysis into the affordability of housing to both rent and buy. This is important and timely as the ability of workers to access housing is shaping macro trends in the housing market with implications for home building, labour mobility and economic growth.
Access to housing and affordability is important for consumers making moving decisions. Moving home is often associated with positive themes such as trading-up to a larger home or moving to a better area.
However, the reality is that for a growing number of households it’s becoming more a question of what housing can be afforded and then considering compromises on location, size of home and accessibility to work.
The report highlights how single earner households and those on low incomes face much greater affordability challenges where the safety net of low cost rented homes is also inaccessible to cater for those in need.
The research report finds that the options to improve affordability are often limited due to the underlying structure of supply and limited choice of smaller sized homes to buy.
The analysis has important implications for the type and tenure of homes that need to be built as part of the 1.5m new homes target in England. The cross subsidy model of development is being challenged by weaker buying power of new home buyers. The report identifies three key focus areas for policy makers to start alleviating affordability challenges and improving access to housing.
A link to the full report is available at the end of this article.
Two fifths of working households are unable to buy
The headline finding is that 40% of full time workers in Great Britain are unable to afford to buy an average priced 2 or 3 bed home with an 80% loan to value mortgage.
Access to home ownership is most constrained in southern England and London where over half of workers can’t afford to buy an average priced 2 or 3 bed home.
The report finds that buying smaller homes and/or using a larger deposit are options to improve buying power and boost affordability but these may not be an option for many households.
Buying smaller homes delivers minimal gains highlighting the growing importance of equity as the key enabler of access to home ownership. Mortgage regulations introduced in 2015 stopped households taking on too much debt and creating a house price bubble but they have restricted access to housing, primarily across southern England.
Renting affordable to more workers than buying
While private rents have jumped by over 30% in the last 3 years, the ability of workers to access private rented housing is a better than for buying.
Just over a quarter of workers are unable to afford renting across Britain. However, in London the picture is much worse with two thirds unable to afford rental costs.
Better access to renting is, in part, down to the greater availability of smaller sized homes in the private rented sector. However, workers on the lowest 20% of earnings face major rental affordability challenges across Britain.
The lack of growth in the stock of social housing for 30 years, and the stalling of growth in private rented housing since 2016 has compounded the pressure on low income households which has driven demand for temporary accommodation.
Affordability becoming more of a problem across regional cities
While there is a clear north-south divide in affordability at the national level, housing affordability is becoming more challenging across regional cities outside southern England as growth in jobs and incomes pushes house prices and rents higher.
There are 18 local authority areas outside southern England where more than 40% of workers are unable to buy. The worst position is in York where 61% of workers are unable to buy. This is followed by areas including Trafford (57%) in Greater Manchester as well as Leicester (46%) and Edinburgh (45%).
The list is different for renting which is led by Manchester where 56% of workers are unable to afford to rent a 2/3 bed home. This is followed by Edinburgh (48%) and then a further 7 areas where more than 30% of workers are unable to afford rental costs led by Nottingham (38%), Salford (36%) and Glasgow (35%).
Three focus areas to start tackling affordability
The analysis shows Britain has a varied pattern of housing affordability with clear differences between buying and renting across the country. There is a link between tenures where pressures in one tenure can have impacts on another. This is most obvious in the rental market where the growing inaccessibility of home ownership increases the demand for renting.
There are no easy solutions for policy makers - the top 3 areas for focus identified in the report are as follows:
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Build more smaller sized 1 and 2 bed homes for home purchase
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Build more rented homes - social and private rented housing
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Government to support creation of a market for long term fixed rate
Addressing housing affordability requires targeting supply into the market pinch-points of the market and taking a cross tenure view. Urgent attention is needed on the mortgage market and the extent to which lenders can support access to housing to a wider range of consumers.
While the narrative on building more homes is welcome, it’s important to shift the discussion on to the types and tenures of homes needed to support economic growth and boost access to housing for people on all incomes.
The home building model in the UK is changing and we will not deliver the homes the country needs without a clearer understanding and appreciation of who will buy them and what they can afford to pay. This applies to both consumer home owners and corporate investors buying homes for rent.
A reset in thinking is needed in policy circles on the new homes business model and the levers to support increased home building across Britain.
Key takeaways
- Affordability of housing increasingly shaping housing market trends with implications for home building, mortgage lending and economic growth
- New analysis finds 40% of full time workers are unable to buy an average priced 2 or 3 bed home in Great Britain
- Renting is more accessible than buying, with 27% of workers unable to afford rental costs despite fast growth in rents
- There is a wide north-south divide in affordability and access to housing is worst for single earners and those on low incomes
- Building more smaller homes to buy, boosting the supply of rented homes and launching a market for long term fixed rate loans are key focus areas for Government to start improving access to housing
- Without any policy response, market forces will shape affordability in the coming years mainly through very low nominal house price inflation and below average sales