Rural homes £27k dearer than in town

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First-time buyers are finding it harder to get on to the property ladder in rural areas than ever before.

Homes in the countryside cost an average £27,000 (16 per cent) more than those in urban areas, says the latest annual Halifax Rural Housing Review.

The report says the premium for country living has soared 35 per cent since 2001, when the gap was £20,000.

The finding could be used to fuel the debate over changes to building regulations, by those who argue that rural areas have an acute shortage of new housing.

According to Halifax, rural property prices rose by an average of £69,170 – equivalent to £576 per month – from £127,146 in 2001 to £196,316 in 2011.

By comparison, urban areas saw an average increase of £62,223 – or £519 a month – from £107,130 to £169,353. In percentage terms, however, prices in urban areas rose by slightly more than in the countryside – 58 per cent against 54 per cent.

While first-time buyers in rural areas pay an average price slightly lower than in urban areas – £132,309 against £137,183 – buying in the countryside has become much more expensive.

Since 2001, the average price paid by first-time buyers rose 90 per cent across rural Britain, against 80 per cent in urban areas.

Since the housing downturn began in late 2007, property prices in the countryside have fallen 22 per cent, and in urban areas by 23 per cent.

South-west England has seen the strongest surge in prices, leaving first-time buyers far behind. This region boasts eight of the ten least affordable rural areas in the entire country.

In West Dorset, the least affordable rural area in Britain – measured by the house price to earnings ratio – average house prices are eight times local gross wages.

South Lakeland, in the North West, and Ceredigion, in Wales, are the only areas among the least affordable local authorities outside south-west England.

In all rural areas, the average house price to earnings ratio is 5.6, against 4.8 in the towns. In only five rural areas is the ratio of prices to earnings below the historical long-term average of four – they include Copeland, Cumbria (3.3), East Ayrshire (3.4), North Lincolnshire, Allerdale, Cumbria (both 3.7) and Northumberland (3.9).

Expensive

Uttlesford, a non-metropolitan district council around Saffron Walden, Essex, on the Hertfordshire/Cambridgeshire border, is the most expensive rural local authority district in Britain with an average house price of £307,507; that’s 57 per cent –- or £112,000 – above the national rural average (£196,319).

East Ayrshire (£103,981) is the least expensive rural area in Britain

Fifteen rural areas have seen average property prices more than double over the past decade.

Two of the five biggest increases were in Scotland with the largest in Moray (162 per cent), followed by Aberdeenshire (150 per cent) and the Highlands (143 per cent).

House prices in seven Welsh local authority districts rose by more than 100 per cent, including Gwynedd (124 per cent), Carmarthenshire (120 per cent) and Ceredigion (119 per cent).

However, the North-South divide on rural housing has narrowed in the past decade.

In 2001, average property prices in the rural South (£171,000) were 75 per cent higher than in the rural North (£97,828); by 2011, the difference has shrunk to 52 per cent (£252,696 in the South and £166,167 in the rural North).

This narrowing has been driven by an average house price increase of 70 per cent in the rural areas of northern England, Wales and Scotland. Rural Scotland had the largest rise in Britain with an average increase of 101 per cent from £79,104 to £158,923.

Rural areas in southern England, on the other hand, have mostly seen more modest increases although property prices remain at a significantly higher level. Property prices in the rural areas of the South East grew by 40 per cent over the decade, and by 63 per cent in the South West.

The difficulty facing first-time buyers in rural areas is most acute in southern England. First-time buyers account for only 15 per cent of all transactions in East Dorset, 16 per cent in mid-Devon (16 per cent) and 17 per cent in South Buckinghamshire.

Halifax housing economist Nitesh Patel says: “Living in the countryside is an aspiration for many homeowners, attracted by the prospect of a better quality of life, open space and a cleaner environment.

“But housing affordability is a growing concern in many rural areas, particularly in the South where in all areas those on average incomes will find it difficult to enter the market.

“This, in turn, is having an adverse impact on the numbers of first-time buyers in these areas.”