"This paper examines the trends of the prices of different dwelling types in the UK. We attempt to explain three features of the data: (i) the long-run relationship between the prices; (ii) the reasons why flat prices tend to lead the prices of other dwelling types; and (iii) the relatively larger downswings in flat prices. We argue that the housing market is not a homogenous mass but a series of submarkets in which property type is one aspect of it. Distinctive patterns in the prices of dwelling types are observed over time because of the different characteristics of participants in the housing submarkets. First-time buyers play a key role in the adjustment process as they can time their entry into the market. In contrast, existing homeowners are relatively unresponsive to economic shocks due to high transactions costs, imperfect capital markets and consumption concerns. They do not divest from housing when economic conditions deteriorate and take time to trade upwards when conditions are favourable. The behaviour of these different groups leads to the distinctive patterns in the data, which are confirmed by our empirical model.""