Rural homes are typically priced significantly higher than urban homes, according to the latest research from Halifax.
While a rural premium exists in all regions it differs greatly, ranging from £86,218 in the South East to £11,570 in the North East. In percentage terms, the premium varies from 59 per cent in the West Midlands to 9 per cent in the North East.
In the past four years, the average price of a home in the countryside has risen by 2 per cent compared with an average 10 per cent increase in urban areas.
A key factor behind the bigger increase in urban house prices has been the relative strength of prices in Greater London. Excluding London, urban prices have risen by 6 per cent.
The recent outperformance of house prices in urban areas may also partly reflect the overall increase in the number of first-time buyers since 2010 as they represent a larger proportion of the market in urban areas. Over the same period, there has been a modest decline in the number of those moving home; a group that is more important in rural property markets.
Martin Ellis, housing economist at Halifax, commented: “There is a significant premium on property in the countryside across Great Britain. Country living remains a widespread aspiration, but relatively high prices put rural homes out of the reach for many. Potential first-time buyers are particularly affected by high property prices, and consequently they account for a smaller proportion of homebuyers in the countryside than in urban areas.”
Affordability in rural areas
The average house price in the countryside is equivalent to 6.3 times gross annual average earnings. The comparable ratio for urban areas is 4.9.
There are only five rural areas where the ratio of prices to earnings is below the historical long-term average of 4.0. Copeland in Cumbria (2.7), Stirling (3.4), East Ayrshire (3.5), Western Isles (3.7), and Pendle in Lancashire (3.9) are the most affordable rural areas in the country.
Cotswold is the least affordable rural area in Britain – measured by the house price to earnings ratio – with an average house price that is 9.4 times local gross annual average earnings. Six of the ten least affordable rural areas in the country are in the South West.
Chiltern is the most expensive rural area in Britain with an average house price of £407,012. This is more than four times higher than in the least expensive rural area – East Ayrshire where the average price is £100,119.
