That sounds sensible to me. Flats really have not been as badly affected as houses. I only really have knowledge of the Kingston/Surbiton area, but I remember 10 years ago flats were higher priced than houses per square foot, now houses are at least 50% more expensive. That is crazy when you consider how much flats have gone up in my example above.
Flats have tripled in value in nominal terms since 1999 but houses in the most sought after areas have gone up at least 4-5 times. Back in 1999, when those 1 bed flats were £85k, £125k would have bought you a Victorian terraced house which would now be £600k. So, the differential has gone up from £40k (47% extra to buy the house) to 325k (118% extra) in 14 years!
In those days, the terraced houses were higher end FTB-buys (2x25K grad salary earners around 25 years old). Today, those FTBs would have to be earning 2x100k salaries to buy it without parental help and there aren't many of those at 25 (or any age!)
I am sure this is the same for many other outer London areas.
I doubt that this will make flats any more resilient when the crash does come, but it certainly makes the comparative bargains now. Presumably the long term investment potential of the house would be a bit better, but how far can the differential stretch? If a 2 bed house becomes more than twice the price of a 2 bed flat of the same size, surely people start buying flats?
I think the reason for this increased differential is the short supply of houses -v- flats these days, particularly good sized period (30s or earlier) houses. The building encouraged by the Labour government from 97-2010 was overwhelmingly weighted towards flats. At some point people want a house - either because they want fewer neighbours/less noise, or because they want the house/garden for a family. It's simple supply/demand economics. We need more houses to be built, but not the shoe boxes which currently go up - proper decent sized houses. If the supply went up, the price would (relatively anyway) go down.......