Halifax

Halifax

November 26, 2013 12:01 ET

Rural Homes Are More Expensive Than Urban Homes in All Regions

There is a rural premium in all regions with countryside homes typically commanding a significant price premium over urban homes, according to the latest research from Halifax.

LONDON, ENGLAND--(Marketwired - Nov. 26, 2013) - While a rural premium exists in all regions it differs significantly, ranging from £86,218 in the South East to £11,570 in the North East. In percentage terms, the premium varies from 59% in the West Midlands to 9% in the North East [Table 1].

Rural house prices have underperformed those in urban areas since 2009

In the past four years, the average price of a home in the countryside has risen by 2% compared with an average 10% increase in urban areas. While prices have risen more rapidly in urban areas in most regions since 2009, 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%.

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

Affordability is a key issue in many 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 [Table 2].

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 [Table 3].

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.

Rural Areas and First-Time Buyers

First-time buyers account for 40% 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 (52%) of such purchases.

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 Cotswold and East Hampshire [Table 4].

In contrast, first-time buyers account for over half of all purchases in Copeland, St Edmundsbury, Pendle, Western Isles, Fenland, Moray, North Warwickshire and Carmarthenshire [Table 5].

Social Housing in Rural Areas

Provision of social housing low in rural Wales, but high in the rural north
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 seven areas - five of which are in Wales - where social housing accounts for 5% or less of total housing stock. At 2% the Isle of Anglesey and South Lakeland have the lowest level of social housing, whereas at the other end of the scale East Ayrshire has the highest level of social housing in rural Britain with 22% [Tables 6 and 7].

Table 1: Rural and Urban Regional Average Prices, 2013

Average Price 2013* % Change (2009-2013) Premium for Rural v Urban
Region Rural Urban Rural Urban £ %
North East 137,010 125,440 2% 4% 11,570 9%
North West 200,997 131,938 2% 1% 69,059 52%
Yorkshire and The Humber 175,466 127,452 1% 2% 48,014 38%
East Midlands 179,692 134,412 4% 4% 45,280 34%
West Midlands 231,996 145,801 2% 5% 86,196 59%
East of England 235,876 204,863 3% 7% 31,013 15%
South East 318,185 231,968 10% 11% 86,218 37%
South West 232,630 183,048 1% 6% 49,583 27%
Scotland 160,374 137,352 -5% -3% 23,022 17%
Wales 154,270 131,184 0% 3% 23,086 18%
London - 316,293 - 18% - -
Great Britain 206,423 182,710 2% 10% 23,712 13%

Source: Halifax. *12 months to August

Table 2: Ten Most Affordable Rural Local Authority Districts, 2013

Local Authority District Region House Prices 2013 (£)* Average earnings 2013** Price to Earnings ratio
Copeland North West 100,791 £37,129 2.7
Stirling Scotland 149,838 £43,885 3.4
East Ayrshire Scotland 100,382 £28,436 3.5
Western Isles Scotland 102,592 £27,483 3.7
Pendle North West 101,296 £26,162 3.9
North Lincolnshire Yorkshire & the Humber 125,276 £31,195 4.0
Shetland Islands Scotland 140,610 £32,793 4.3
West Lindsey East Midlands 135,343 £31,044 4.4
Selby Yorkshire & the Humber 158,055 £36,026 4.4
Allerdale North West 133,364 £30,148 4.4
Rural Great Britain 206,423 £32,882 6.3
Urban Great Britain 182,710 £36,916 4.9

Source: Halifax. *12 months to August; ONS

Table 3: Ten Least Affordable Rural Local Authority Districts, 2013

Local Authority District Region House Prices 2013 (£)* Average earnings 2013** Price to Earnings ratio
Cotswold West Midlands 318,128 £33,721 9.4
Torridge South West 201,076 £24,536 8.2
North Dorset South West 215,906 £26,955 8.0
Chiltern South East 407,012 £53,208 7.6
East Devon South West 213,677 £28,574 7.5
Vale of White Horse South East 288,522 £39,202 7.4
Teignbridge South West 202,566 £27,526 7.4
North Devon South West 194,000 £26,371 7.4
East Dorset South West 281,760 £38,426 7.3
East Hampshire South East 291,990 £39,862 7.3
Rural Great Britain 206,423 £32,882 6.3
Urban Great Britain 182,710 £36,916 4.9

Source: Halifax. *12 months to August; ONS

Table 4: Ten Rural Local Authority Districts with the lowest % of First-Time Buyers (FTBs), 2013

Local Authority District Region FTB% share of all buyers*
Cotswold South West 23%
East Hampshire South East 25%
Torridge South West 27%
Sedgemoor South West 28%
East Dorset South West 28%
Teignbridge South West 29%
Maldon East of England 29%
Malvern Hills West Midlands 30%
Tonbridge and Malling South East 30%
Derbyshire Dales East Midlands 31%
Rural Great Britain 40%
Urban Great Britain 52%

Source: Halifax House Price Database; * 12 months to August

Table 5: Ten Rural Local Authority Districts with the highest % of FTBs, 2013

Local Authority District Region FTB% share of all buyers*
Copeland North West 58%
St Edmundsbury East of England 57%
Pendle North West 56%
Western Isles Scotland 56%
Fenland East of England 55%
Moray Scotland 53%
North Warwickshire West Midlands 51%
Carmarthenshire Wales 50%
Babergh East of England 49%
East Ayrshire Scotland 49%
Rural Great Britain 40%
Urban Great Britain 52%

Source: Halifax House Price Database; * 12 months to August

Table 6: Ten Rural Local Authority Districts with the Least Social Housing, Great Britain 2012

Local Authority District Region Social Housing as % of All Housing Stock, 2012
Isle of Anglesey Wales 2%
South Lakeland North West 2%
Carmarthenshire Wales 3%
Tendring East of England 4%
Pembrokeshire Wales 4%
Powys Wales 4%
Denbighshire Wales 5%
Wyre North West 7%
Orkney Scotland 8%
Wealden South East 8%
Rural Great Britain 12%
Urban Great Britain 19%

Sources: DCLG/ Halifax estimates

Table 7: Ten Rural Local Authority Districts with the Most Social Housing, Great Britain 2012

Local Authority District Region Social Housing as % of All Housing Stock, 2012
East Ayrshire Scotland 22%
Copeland North West 19%
Allerdale North West 19%
East Lothian Scotland 18%
Northumberland North East 18%
North Warwickshire West Midlands 17%
St Edmundsbury East of England 17%
Wiltshire South West 17%
Richmondshire Yorkshire & the Humber 17%
Bassetlaw East Midlands 17%
Rural Great Britain 12%
Urban Great Britain 19%

Sources: DCLG/ Halifax estimates

Notes to editors:

(1) From ONS and Halifax estimates for August 2013 for full-time employees.

All price figures refer to the arithmetic average of house prices and have not been standardised. These prices are not standardised and therefore can be affected by changes in the sample from year to year. The data covers the period 2003 to 2013 and has been extracted from the Halifax House Price database. The figures cover the 12 months to August 2013.

Helpline No: 08456 045404

This analysis was undertaken using the Office for National Statistics (ONS) Urban Rural classification. This classification defines an area as a Rural Area if it lies in a town or village of less than 10,000, or as an urban area if it lies in a town or city of 10,000 or more. A rural local authority is one where the majority of people live in rural areas. Data on average earnings is based on ONS figures for April 2012, which have been inflated by national average earnings growth to calculate 2013 estimates at local authority level.

The affordability ratio is calculated as average house prices divided by the average annual earnings of full time employees.

Data on social housing for England and Wales is published by the DCLG. For Wales the data is for 2012. Scottish data is from the Housing Statistics for Scotland published by the Scottish Government.

"This report is prepared from information that we believe is collated with care, however, it is only intended to highlight issues and it is not intended to be comprehensive. We reserve the right to vary our methodology and to edit or discontinue/withdraw this, or any other report. Any use of this report for an individual's own or third party commercial purposes is done entirely at the risk of the person making such use and solely the responsibility of the person or persons making such reliance."

Contact Information

  • For further information please contact
    Helpline No: 08456 045404

    Halifax Press Team
    Ben Marquand
    01422 332833 / 07881 311199
    ben.marquand@halifax.co.uk