You might have thought a swish new apartment decked out with the latest wood flooring and limestone tiles to entice rich City boys would be the best place to put your money. But the humble Victorian terrace is a far better investment, according to new research from homefinders County Homesearch.

Analysis of 10 major UK cities ? including Birmingham, Bristol, Leeds, Liverpool and Manchester ? shows that prices for flats ? are stagnating, while the value of terraced houses is booming, rising more than three-fold over the last decade compared to flats at just over two-and-a-half times the price in the same timespan.

City centre flats in major cities ? particularly those in new waterside schemes ? achieved higher price growth than other types of property from 1997 to 2003, but faltered after that. But more low-key period terraces have out-stripped detached or semi-detached neighbours.

So, why has there been a revival of the terrace? Rising interest rates are sharply reducing new buy-to-let entrants to the city flat market, and recent turmoil in the mortgage markets due to the sub-prime crisis in America will make loans in this sector even harder to come by.

Repossessions of newly built property that investors have struggled to let also are on the increase, says County Homesearch. In Leeds, for example, prices for flats have not risen since 2004 and there are many more developments being built to add to the stagnation.

‘Our research based on data from the Land Registry demonstrates the increasing popularity of the traditional terraced house,’ says Jonathan Haward, managing director of County Homesearch. ‘With new flats being increasingly overvalued over the past few years, focus has now turned to well-built Victorian properties in prime locations, which are proving to be a better investment.’

Flats built in fringe developments, where the infrastructure is not in place, do not appeal to anyone, particularly families for whom access to schools and play areas is important, he adds. ‘This, along with the oversupply of flats, has led to prices dropping in cities, with many investors unable to sell for the same price they bought.’

For further information contact the County Homesearch Company 01872 223349 or 07836 613388.