The trend for smaller and smaller urban flats wasn’t the answer to the UK’s housing needs, but then, neither is a return to just building traditional family homes

The recent stock exchange announcements of major housebuilders has one central message: adieu to flats.

Given the English preference for houses, the shift of the past decade has been rather surprising. Back in the mid-nineties, only about 15% of new build came in the form of flats; by 2007 this had risen to almost half.

Even more peculiar is the fact that almost all of these contained just one or two bedrooms. The sorts of spacious, family-sized apartments I have seen in the posher parts of Edinburgh and Glasgow are still inconceivable south of the border, except among London’s elite.

The oversupply tends to get blamed on planning policy – particularly PPG3 – and I am sure the spirit, if not the letter, of this guidance had some effect. But the actual document specified 30-50 dwellings per hectare, which does not necessarily entail lots of small flats. The real culprit was the collective realisation that you could sell 500 tiny flats off-plan to a property club or Irish investor with little interest in whether anyone would or could actually live in the end product.

With this model broken by the credit crunch, housebuilders are trumpeting a return to traditional family homes. This translates as two-storey detached houses with gardens, which means about 20 dwellings per hectare. If this is widely adopted, however, it will not be without pain.

The boom in land values was driven by increasing densities as much as ballooning house prices, and many of the sums paid at the peak of the boom are only justified by tiny high-rise flats.

Returning to more spacious homes will further deflate land values, for the simple reason that fewer of then will be put on one site. Admittedly these are more expensive than small flats – but not so much that they will bridge the price gap.

This could further damage developers’ financial positions while reducing land supply. This will be complicated by the fact that expensive houses will mean lower delivery and sales rates – making the volumes that the government wants, and the industry needs, ever less likely.

The solution is a more diverse marketplace – one that includes suburban detached homes, but also larger flats, maisonettes and townhouses for an increasingly diverse and urban population.