The $30 billion flat market in free fall

The market for London flats is crumbling, with nearly half of small flats selling for less than their original price, according to analysis of Land Registry data by property data firm Bricks&Logic. Almost half of small London flats - those classed as either one-beds or studios - are now selling for less than they were bought for, with losses extending to flats bought 10, 15 or even more than 20 years ago.

The slump in flat prices in London appears to be spreading out across the country, with one third of one-bed flats selling for a loss outside the capital, while just over a quarter of two and three-bed flats are being sold at a lower price than they were bought for.

Hayley Minn, 34, is one such flat owner in the capital facing the prospect of selling her home for less than she bought it for. Hayley bought a two-bedroom flat in Greenwich with her husband two-and-a-half years ago for £470,000. they are now trying to sell the flat for £460,000, with it having been on the market for almost a year.

Hayley and her partner dream of buying a house outside of London in St Albans, but with a £380,000 mortgage on their flat, they won't be able to afford it if they slash the price any further.

The 6 .2% price drop in inner London flats

The average price of an inner London flat has fallen by 6.2 per cent in the last year alone, according to Land Registry data, wiping around £35,000 off the typical selling price. Nicholas Austin,branch manager of estate agents RiverHomes, in Putney, south-west London, says many flat owners in his part of the capital are also starting to accept the reality that their flats are worth less than they paid.

'The flat market in London is under real pressure and the data increasingly reflects what many of us working in the market have been seeing for some time,' he says. 'Flats account for around 60 per cent of transactions in London, yet approximately 90 per cent of loss-making resales are flats.'

The toxic reputation of leasehold

England has fallen out of love with the flat, says Ashley Osborne, founder of buy-to-let platform, Lexit. 'The toxic reputation of leasehold, together with spiralling service charge costs, means that the numbers no longer work for landlords. At the same time, owner occupiers are either too scared of rising costs, or the service charges are too high - relative to capital values - to get a mortgage.'

The slump in flats is spreading out of London, with one third of one-bed flats selling for a loss outside the capital, while just over a quarter of two and three-bed flats are being sold at a lower price than they were bought for.

Who is to blame for the flat market collapse?

The Government has been accused of failing to address the issue of leasehold, with Nicholas Austin saying that 'for years, policy has assumed that flats - particularly smaller flats - are the natural first rung on the housing ladder. But increasingly that model appears to be breaking down.'

Hayley Minn, 34, is one such flat owner in the capital facing the prospect of selling her home for less than she bought it for. Hayley bought a two-bedroom flat in Greenwich with her husband two-and-a-half years ago for £470,000. They are now trying to sell the flat for £460,000, with it having been on the market for almost a year.