Housing Less Affordable in Rural Areas of the UK

Not for broadcast or publication before 00:01 Hrs Saturday 13^th September 2008

This is the fourth annual HalifaxRural Housing Review.  The Review covers 123 Local Authorities in Great Britain which are defined as rural areas, according to ONS classifications.  The Review uses Halifax house price data to calculate rural house price movements. Separate reviews covering Scotland and Wales are also available.

Housing Less affordable in Rural areas 

Key findings of the research by Halifax Estate Agents shows that:

• The average level of house prices in rural areas is £235,324, 15% higher than the average urban house price of £204,290[1]
• The most expensive rural local authority (LA) in Great Britain is Chiltern in Buckinghamshire with an average house price of £448,635.  All ten of the most expensive rural LA's are in southern England
• The three most expensive rural LAs - Chiltern, Waverley and Tandridge - also have the best quality of life among rural areas
• Pendle in the North West is the least expensive rural LA with an average house price of £129,887 followed by the Western Isles (£137,319) and Copeland (£138,111)
• The average property price in rural areas is 7.3 times average annual earnings compared with a ratio of 6.1 in urban areas
• Seven of the ten least affordable rural local authorities are in the South West. North Devon is the least affordable with an average house price (£252,792) that is 9.1 times local annual average earnings (£27,853)
• Copeland in the North West is the most affordable rural area with an average house price: earnings ratio of 3.9 followed by Bassetlaw in the East Midlands (4.5) and Pendle (4.5)
• First time buyers account for just 21% of all rural buyers compared with 37% in urban areas
• 13% of the housing stock is social housing in rural areas compared with 20% in urban areas

Suren Thiru, economist at Halifax, said:

"Housing in rural areas is less affordable than in urban areas due to a combination of higher average prices and lower average earnings. The difficulties for home buyers in rural locations are particularly acute among first time buyers and are exacerbated by relatively low levels of social housing provision."

KEY FINDINGS

House Prices

Rural house prices are 15% higher than in urban areas
The latest annual Halifax Rural Housing Review shows that the average house price across rural Great Britain is 15% more expensive than the average house price in urban areas. House prices in rural areas currently average £235,324, £31,034 higher than the average urban house price of £204,290.

Eight of the ten most expensive rural LA's are in the South East (Table 1)
The most expensive rural local authority (LA) in Great Britain is Chiltern in Buckinghamshire with an average house price of £448,635. Waverley in Surrey (£396,605) and Tandridge in Surrey (£367,016) are the second and third most expensive rural areas. Eight of the ten most expensive rural LA's are in the South East; the exceptions are Uttlesford (£313,896) and East Hertfordshire (£309,832) in the East of England. All ten of the most expensive rural LA's are in southern England.2

The most expensive rural LA's are also the top ranked rural local authorities by quality of life (Table 1)
Chiltern, Waverley and Tandridge, the three most expensive rural LA's, also have the best quality of life among rural LA's3. Residents of Chiltern - the most expensive rural LA - has the best quality of life amongst rural LA's with the healthiest and best paid residents. In addition, the majority of householders in Chiltern are owner-occupiers (80%) and the houses are larger than average (6.3 rooms).All ten of the top ranked LA's by Quality of Life as well as the ten most expensive rural LA's are in southern England2.

Bridgnorth is the most expensive rural LA outside southern England2   (Table 2)
Bridgnorth in the West Midlands has the highest average price of any rural local authority outside southern England, at £268,579. South Northamptonshire (£257,986) and Derbyshire Dales (£255,455) are the next most expensive rural areas outside the south.

Pendle is the least expensive rural LA in Britain (Table 3)
The North West local authority of Pendle is the least expensive rural LA in Britain with an average house price of £129,887. Western Isles in Scotland (£137,319) and Copeland (£138,111) are the second and third least expensive rural areas in Great Britain. Just two Waveney and East Lindsey - out of the ten least expensive rural LA's feature in the top hundred rural LA's by quality of life.

Housing Affordability
House prices in rural areas are more than seven times average annual earnings (Table 4)

As a result of higher house prices and lower average earnings, property in rural areas is generally less affordable than in urban areas. The average property price in rural areas is 7.3 times average annual earnings compared with a ratio of 6.1 in urban areas.

Seven of the ten least affordable rural local authorities are in the South West (Table 4)

North Devon in the South West is the least affordable local authority in Great Britain with an average house price (£252,792) that is 9.1 times local annual average earnings (£27,853). The next least affordable rural districts are East Devon and Kerrier in Cornwall, at 8.7, and North Norfolk and Penwith where average house prices are 8.4 times average earnings. Seven of the ten least affordable rural areas are in the South West.

Copeland is the most affordable rural LA in Britain (Table 5)

Six out of the ten most affordable rural LA's are in the East Midlands. With an average house price that is 3.9 times local average annual earnings, Copeland in the North West is the most affordable rural area followed by Bassetlaw in the East Midlands (4.5) and Pendle in the North West (4.5).

2 Includes Greater London, South East, South West and the East of England

3 Based on the Halifax Estate Agents 'Rural' Areas Quality of Life Survey.

First Time Buyers

First time buyers in rural areas account for 21% of all buyers (Table 6)

There are far fewer first-time buyers (FTBs) in rural areas with FTBs accounting for just 21% of all buyers compared with 37% in urban local authorities. The average house price paid by an FTB in rural areas (£150,767) is, however, 7% lower than the average urban house price for FTBs (£162,570).

South Hams has the smallest proportion of FTBs (Table 6)

South Hams in the South West is the rural LA with the lowest proportion of FTBs (7%) followed by Bridgnorth (10%) and South Northamptonshire (13%). At the other end of the spectrum, East Cambridgeshire in the East of England and Pendle have the highest proportion of FTBs (both 43%).

Social Housing

Social Housing in rural England is significantly lower than in urban areas (Table 7)

13% of the rural housing stock in England is social housing compared with 20% in urban areas. Kennet in Wiltshire and Wear Valley have the highest levels of social housing (21% in both). In contrast, Wealden in East Sussex has the lowest proportion of social housing (7%) of any rural area.

Ends.

Editors' Notes

House prices used in the research are arithmetic annual average prices of houses otherwise known as crude averages - on which an offer of mortgages has been granted.  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 2008 and has been extracted from the Halifax House Price database.

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 2007, which have been inflated by national average earnings growth to calculate 2008 estimates at local authority level.

The affordability ratio is calculated as average house price divided by the average annual earnings of full time employed male.

The rural Quality of Life rankings are based on the Halifax Estate Agents Rural Areas Quality of Life Survey (5^th May 2008). It tracks where living standards are highest in Great Britain's rural local authorities. By ranking local performance across key indicators of the labour market, the housing market, the environment, education and health. The index examines data at local authority (LA) level. 123 rural local authorities have been identified and analysed. An area is defined as Rural if it lies in a town or village of less than 10,000. A rural local authority is one where the majority of people live in rural areas. Data has been gathered from sources including the ONS, DEFRA, the Met Office, the Department for Transport and the Halifax house price database.

Table 1: Ten most expensive Rural Local Authorities in Great Britain, 2008

* 12 months to June

Sources: ONS, Halifax House Price Database, Halifax estimates

Table 2: Ten most expensive Rural Local Authorities in Great Britain outside Southern England, 2008

* 12 months to June

Sources: ONS, Halifax House Price Database, Halifax estimates

Table 3: Ten least expensive Rural Local Authorities in Great Britain, 2008

* 12 months to June

Sources: ONS, Halifax House Price Database, Halifax estimates

Table 4: Ten Least Affordable Rural Local Authorities in Great Britain, 2008

                * 12 months to June

               **Based on ONS average earnings figures for April 2007, which have been inflated by national average earnings                        growth to calculate 2008 estimates at local authority level.  Earnings figures relate to the average for full-time male employees.

                Sources: ONS, Halifax House Price Database, Halifax estimates 

Table 5: Ten Most Affordable Rural Local Authorities in Great Britain, 2008

                *12 months to June.

               ** Based on ONS average earnings figures for April 2007, which have been inflated by national average earnings                             growth to calculate 2008 estimates at local authority level.  Earnings figures relate to the average for full-time male employees.

                Sources: ONS, Halifax House Price Database, Halifax estimates

Table 6: 10 Rural Local Authorities - lowest % of First Time Buyers (FTBs), Great Britain

                                  *12 months to June.

                                Source: Halifax House Price Database

Table 7: Ten Rural Local Authorities with the Most Social Housing, Great Britain 2007

                             * 12 months to June

                             Source: Halifax House Price Database

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