Bigger homes have been driving property price growth over the past year, according to analysis by a major bank.

The trend could make it easier for first-time buyers to take their first step on the property ladder – but harder for them to move up to a property with more space.

The average price of a terraced home increased by 4.5% in the year to January 2025, Halifax said.

Detached homes recorded the next highest annual increase, at 4.1%, while semi-detached property prices increased by 3.8% annually.

Flats lagged behind, with an average annual price increase of 3.2%.

Flats do buck the trend, however, when looking at new-build homes, the report said.

While overall annual price growth for newly-built properties was 3.1%, for new-build flats it was significantly higher – at 6.7%.

The figures were based on analysis of Halifax’s UK house price index.

Amanda Bryden, head of Halifax Mortgages, said: “The fortunes of different property types tend to ebb and flow depending on broader market conditions.

“This time last year, the average price of a flat had risen more quickly than a detached house, as buyers adjusted to higher borrowing costs and sought to compensate by targeting smaller properties.

“Now, as interest rates have started to ease, it’s once again those homes offering more space which are fuelling demand.”

She said that over the past decade: “Bigger properties have tended to outperform smaller homes when it comes to price growth.

“This has caused the gap between the rungs on the housing ladder to widen further, presenting a bigger challenge to those looking to make the step up.

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“However, that only tells part of the story. Slower growth among smaller homes is helpful for first-time buyers, and we saw a big rebound in that market last year, with a fifth more stepping onto the ladder.”

Flats account for about 27% of first-time buyer purchases in the UK, but this varies significantly by region, from 71% in London to just 4% in the East Midlands, Halifax said.

The report was released as separate research released by property website Zoopla indicated that more than three-quarters (78%) of homeowners do not have a clear idea of how much their property is worth.

Those who have owned their home for 30 years or more are more likely to have an accurate idea of its value (31%), compared to the wider average of 22% the research indicated.

Zoopla said this group tends to be more aware of fluctuations in house prices, checking the value of their property an average of four times a year.

The survey was carried out by Mortar Research in March 2025 among more than 1,000 people who sold or had a property that they owned valued in the past three years. The data compared what homeowners thought their home was worth, with what professional estate agents valued it at.

Matt Smith, a mortgage expert at Rightmove, said: “Average mortgage rates at the top end of the market have fallen more quickly than for those with the smallest deposits over the past year. Someone with a 10% deposit is still looking at an average five-year mortgage rate of 4.92%, only slightly down from 4.99% at this time last year.

“By contrast, someone with a 40% deposit is now looking at an average five-year mortgage rate of 4.19%, down from 4.37% – and we are still seeing some products below the 4% mark in this bracket.

“So while borrowing power has improved for first-time buyers, higher, and slower falling, mortgage rates for those with smaller deposits is still stretching affordability.”

Toby Leek, president of property professionals’ body NAEA (National Association of Estate Agents) Propertymark, said: “Terraced homes are likely proving popular amongst buyers as they often offer a home with a larger garden and parking at a more affordable price, allowing many to maintain a sustainable financial balance.

“As different areas across the country offer more value for money, it’s likely we will continue to see buyers adjusting their criteria and broadening their search areas.”

Average prices in January 2025 for various property types followed by the percentage increase, according to Halifax:

– All properties, £294,818, 3.7%

– Flats, £168,569, 3.2%

– Terraced homes, £235,296, 4.5%

– Semi-detached homes, £307,685, 3.8%

– Detached homes, £471,748, 4.1%

And here are average prices across the UK for all property types in January 2024 followed by January 2025, with the difference in cash and percentage terms, according to Halifax:

East Midlands, £234,700, £242,581, £7,881, 3.4%

Eastern England, £325,574, £334,232, £8,658, 2.7%

London, £526,571, £540,861, £14,290, 2.7%

North East, £167,769, £176,464, £8,695, 5.2%

North West, £227,529, £237,681, £10,152, 4.5%

Northern Ireland, £193,653, £205,035, £11,382, 5.9%

Scotland, £203,066, £207,909, £4,843, 2.4%

South East, £377,044, £387,984, £10,940, 2.9%

South West, £293,678, £305,170, £11,492, 3.9%

Wales, £217,121, £224,875, £7,755, 3.6%

West Midlands, £248,761, £258,617, £9,856, 4.0%

Yorkshire and the Humber, £204,084, £213,459, £9,376, 4.6%