Country homes costs 26% more

12 November 2014

Homes in all rural areas of the UK command a £46,575, or 26%, premium on average when compared to similar urban dwellings.

The premium is the most substantial in the West Midlands at £88,781, or 57%, compared to just £17,570, or 13%, in the North East, according to analysis from mortgage lender Halifax.

Country properties are typically more than a fifth bigger than they are in towns and cities, spread over 127 square metres on average, compared with 104 square metres in urban areas.

Across all regions, the average rural home costs 6.8 times gross annual average earnings - a much higher multiple than the 5.6 seen in urban areas.

In fact, there are only three rural areas where the price to earnings ratio is below the historic long-term average of 4. These are Copeland in Cumbria and East Ayrshire (where the ratio is 3.8) and North Lincolnshire (3.9). This makes them the most affordable rural areas in the country.

Halifax data revealed that between 2009 and 2014, the average price of a country home in increased by 12%, while the average rise in towns and cities was 18%. That said, during the past year, the average price of an urban home has risen faster - at 10% (excluding Greater London), compared to 8% for rural homes.

There are also fewer first-time buyers in the country, with some being priced out. They account for 42% of all mortgages arranged in rural areas, compared to 54% in urban areas. Halifax said "the relative strengthening of the first-time buyer market" had helped bring about the "recent outperformance of house prices in urban areas".

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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."

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