12th November 2014
Countryside properties are commanding a £46,575 average premium over the cost of urban homes when you exclude London, a study by Halifax has revealed.
On average, homes in rural areas in Great Britain are or 26% more expensive than those in urban locations, aside from those in Greater London. The rural premium is greatest in the West Midlands at £88,781 or 57% compared to £17,570 or 13% in the North East.
However, prices in urban areas have been rising faster over the past five years and the gap is narrowing. 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 rose by 8% compared with an average 10% increase in urban areas , again excluding London. First-time buyers account for 42% of all mortgaged purchases in rural areas, compared to 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 year, Halifax said.
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.
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.
Chiltern is the least affordable rural area in Britain with an average house price that is 9.5 times local gross annual average earnings.
Chiltern is also the most expensive rural area in Britain with an average house price of £477,526.
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.
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.”