Latest research from Halifax shows that properties in the countryside properties are continuing to command a substantial price premium over urban homes.
On average, homes in rural areas are £46,575 (or 26%) higher in price than in urban areas.
There is a rural house price premium in all regions although it differs significantly across the country. The rural premium is greatest in the West Midlands at £88,781 (57%) compared to £17,570 in the North East (13%).
Halifax found that 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 2009 and 2014, the average price of a home in the countryside rose by 12% compared with an average increase of 18% in urban areas. Between 2013 and 2014, the average price of a home in the countryside has risen by 8% compared with an average 10% increase in urban areas (these figures exclude Greater London).
First-time buyers account for 42% of all mortgage financed purchases in rural areas, compared to more than half (54%) in urban areas.
The recent outperformance of house prices in urban areas partly reflects the relative strengthening of the first-time buyer market in the last few years. Since 2010 there has been a significant increase in the number of first-time buyers, and this group typically represents a larger proportion of the market in urban areas.
Martin Ellis, housing economist at Halifax, said: “It typically costs significantly more to buy in rural areas with a substantial premium existing in all the regions of Great Britain. This reflects the aspiration of many to own a property in the countryside.
“The relatively high prices, however, put rural homes out of the reach for many, particularly the young. This is reflected in first-time buyers accounting for a smaller proportion of homebuyers in the countryside than in urban areas.”
The average house price in the countryside is equivalent to 6.8 times gross annual average earnings.This significantly exceeds the comparable ratio for urban areas of 5.6.
Social housing provision is typically lower in rural areas of England and Wales, with 12% of the housing stock accounted for by social housing compared with 19% in urban areas.
There are only three rural areas where the ratio of prices to earnings is below the historical long-term average of 4.0. Copeland in Cumbria and East Ayrshire (both 3.8) and North Lincolnshire (3.9) are the most affordable rural areas in the country.
Chiltern is the least affordable rural area in Britain– measured by the house price to earnings ratio – with an average house price that is 9.5 times local gross annual average earnings. Six of the 10 least affordable rural areas in the country are in the South East with the other four in the South West.
Chiltern is also the most expensive rural area in Britain with an average house price of £477,526.
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 quarter of all purchases in East Dorset (24%), Waverley (26%) and West Dorset (26%).
In contrast to Southern England, first-time buyers account for over half of all purchases in ten areas across the rest of Britain and more than six in ten in Pendle (62%) and Gwynedd (61%).
There are five areas – all in Wales – where social housing accounts for 5% or less of total housing stock. At 2% the Isle of Anglesey has the lowest level of social housing. At the other end of the scale, East Ayrshire has the highest level of social housing in rural Britain with 22%.
Properties in the country are typically more than a fifth larger than in towns and cities. The average rural home is 127m2 in size compared with 104m2 in urban areas.
