Halifax

Premium attached to countryside living

30 October 2015

Rural homes £43,490 more expensive than homes in urban areas

Property prices in the countryside are, on average, £43,490 (22%) higher than in urban areas1, according to the latest annual Halifax Rural Housing Review.

There is a rural premium in all regions with countryside homes typically commanding a significant price premium over urban areas, although there are large variations across the country. In rural areas of West Midlands the average house price of £252,927 is £84,610 (or 50%) higher than in the region's urban areas (£168,317) - the largest difference.  In the East of England, the premium is £16,806 (or 6%) - the smallest difference. (See Table 1)

Rural Britain less affordable than urban areas

House prices in rural areas are less affordable than in urban areas. The average property price in rural areas is 7.0 times average annual earnings2 compared with a ratio of 5.9 in urban areas.

The least affordable rural local area district (LAD) in Great Britain is Tandridge in Surrey where the average house price of £433,932 is 10.8 times local annual average earnings of £40,266. All ten of the least affordable rural LADs in Britain are in southern England, including East Dorset where the average house price of £329,056 is 9.6 times local annual average earnings; followed by Purbeck in Dorset (9.4), Mid-Sussex, Cotswold and North Devon (all 9.2). The least affordable rural LADs outside the south are Hambleton (8.2) and Ryedale (8.1) – both are in the North York Moors.

Copeland in West Cumbria is the most affordable rural LAD  in Great Britain with an average house price of £140,364 that is 3.7 times local average annual earnings of £38,367. (See Table 2 and 3)

Chiltern is the most expensive rural area in Britain with an average house price of £465,970.  The next most expensive rural LADs are Waverley in Surrey (£462,145), Tandridge and South Oxfordshire (£396,287). The average house price in Chiltern is four times higher than in East Ayrshire (£115,394) - the least expensive rural LAD.

Prices in urban areas have been rising faster over the past five years

Despite the higher price for buying in the countryside the gap with urban prices is narrowing, and property prices have risen more slowly in rural areas during the past five years.

Between 2010 and 2015, the average price of a home in the countryside rose by 13% compared with an average increase of 23% in urban areas. Between 2014 and 2015, the average price of a home in the countryside has risen by 5% compared with an average 8% increase in urban areas (these figures exclude Greater London). Overall, the rural-urban premium has narrowed from 34% (or £52,279) over the last decade.

Fewer first-time buyers in rural areas

First-time buyers account for 42% of all mortgage financed purchases in rural areas. This is significantly lower than in urban areas where first-time buyers account for more than half (54%) of such purchases. Affordability difficulties are the key factor behind the lower level of first-time buyers in rural areas. 

Due to the high level of property prices, getting on the rural property ladder is at its most challenging for first-time buyers in southern England. First-time buyers account for only a fifth of all purchases in Purbeck, and around a quarter in East Dorset (24%), Waverley and West Dorset (both 26%).  Away from southern areas, the proportion of first time buyers increases significantly to over three out of five buyers in Pendle in Lancashire (62%) and Gwynedd (61%). (See Tables 4 and 5)

Social Housing in Rural Areas

Social housing provision is typically lower in rural areas of Britain, with 12% of the housing stock accounted for by social housing compared with 19% in urban areas.

There are twenty areas where social housing accounts for less than 10% of total housing stock, including the Wyre, Ribble Valley (both in Lancashire), Wealden in East Sussex and East Dorset. (See Table 6)

East Ayrshire has the highest level of social housing in rural Britain, followed by Ceredigion, Forest Heath in West Suffolk and Copeland. (See Table 7)

Property Size

Properties in the country are typically more than a fifth larger than in towns and cities. The average rural home is 120m2 in size compared with 97m2 in urban areas.

Craig McKinlay, Mortgage Director, Halifax commented:

"Many homeowners aspire to live in the countryside, attracted by the prospect of a better quality of life, open space and a cleaner environment. However, realisation of this dream comes at a cost with average property values typically over a fifth higher than in urban areas.

"A side-effect of rising property values is that housing affordability has become an increasing concern in many rural areas. This is particularly true in the south where those on average incomes find it very difficult to enter the market.”

ENDS

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