Property prices in the countryside are, on average, £27,047 (17%) higher than in urban areas, according to the latest annual Bank of Scotland Rural Housing Review. This premium has widened from 14% or £17,539 over the last decade.
There is a rural premium in all regions with countryside homes typically commanding a significant price premium over urban areas, although there are large variations across Great Britain. In rural areas of West Midlands the average house price of £252,927 is £84,610 or 50% higher than in the region's urban areas (£168,317) - the largest difference. In the East of England the premium is £16,806 (or 6%) - the smallest difference. (See Table 1)
Prices in urban areas have been rising faster over the past five years
Despite the higher price for buying in the countryside, the gap with urban prices is narrowing and property prices have risen more slowly in rural areas during the past five years.
Between 2010 and 2015, the average price of a home in the Scottish countryside rose by 13% compared with an average increase of 15% in urban areas. In the past year the average price of a home in the countryside has risen by 5%, marginally lower than the 6% increase in urban areas.
The most affordable rural local area district (LAD) in Scotland is East Ayrshire with an average house price of £115,394 which is 3.8 times the local average annual earnings of £30,299. Dumfries and Galloway is the second most affordable rural LAD in Scotland, with an average house price of £128,245, 4.5 times the average earnings of £28,691. Argyll and Bute is Scotland’s third most affordable. Average house prices there are £153,508, 5.1 times the annual earnings of £30,065. (See table 2)
Across Great Britain, East Ayrshire is the second most affordable LAD, with Copeland in West Cumbria being the most affordable, with an average house price of £140,364 - 3.7 times local average annual earnings of £38,367. Dumfries and Galloway is fourth most affordable, while Argyll and Bute is ranked tenth. (See table 3)
The least affordable rural LADs in Scotland are Aberdeenshire (6.4 times) and East Lothian (6.2 times).
Fewer first-time buyers in rural areas
First-time buyers account for 43% of all mortgage financed purchases in Scottish rural areas. This is lower than in urban areas where first time buyers account for half (50%) of such purchases. Affordability difficulties are the key factors behind the lower level of first-time buyers in rural areas. (See table 4)
Getting on the rural property ladder is at its most challenging for first-time buyers in the Scottish Borders where they only account for 38% of buyers in that area. East Lothian, Argyll and Bute, Aberdeenshire and Perth and Kinross also sit below the Scotland average.
Dumfries and Galloway and the Western Isles both have the highest number of first-time buyers in Scotland, accounting for over half of buyers (55%). They sit joint sixth in Great Britain along with Carmarthenshire in Wales. Pendle in Lancashire (62%) and Gyynedd in Wales (61%) are the LADs with the highest percentage of first-time buyers in Great Britain. (See table 5).
Social Housing in Rural Areas
Social housing provision is marginally lower in rural areas of Scotland, with 15% of the housing stock accounted for by social housing compared with 17% in urban areas.
In Perth and Kinross social housing accounts for 10% of total housing stock, with Aberdeenshire close behind with 11%. East Ayrshire has the highest level of social housing in rural Britain (22%), followed by Ceredigion, Forest Heath in West Suffolk, Copeland, Allerdale and East Lothian (all 19%). (See tables 6 and 7)
Properties in the rural areas of Scotland are typically a third larger than in towns and cities. The average rural home is 130m2 in size compared with 100m2 in urban areas.
Nitesh Patel, economist at Bank of Scotland, said, "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. However, this aspiration comes at a cost with average property values almost a fifth higher than in urban areas.
"A side-effect of rising property values is that housing affordability has become an increasing concern in many rural areas, particularly in Aberdeenshire and East Lothian where those on average incomes typically find it difficult to enter the market. This, in turn, prices many first-time buyers out of the housing market.”