The UK's pandemic housing market 'race for space' seems to have reversed, according to new market data.
Prices for flats and other smaller homes have been increasing faster than for bigger houses, figures from lender Halifax showed.
During Covid, pandemic lockdowns inspired buyers to search for bigger homes and more outdoor space, with that price differential existing for most of the past four years.
But the average price of a flat increased by 2.7% in the year to February, versus a 1.7% rise for a semi-detached home, 2.0% for a detached home and 2.6% for the average terraced property, Halifax found.
Annual property price growth reached 1.9% in February, with an average sale price of £282,430.
The squeeze from higher interest rates and tighter mortgage affordability has forced the demand for smaller homes, Halifax said.
Amanda Bryden, head of Halifax Mortgages, said: "One way to compensate for higher borrowing costs is to target smaller properties."
This trend is especially seen among first-time buyers, who she noted now account for the largest proportion of homes purchased with a mortgage in almost 30 years.
"We see this reflected in property prices for the first few months of this year, with the value of flats rising most sharply, closing the growth gap on bigger properties that’s existed for most of the last four years."