Properties in the Scottish countryside are, on average, £17,231 (11%) more expensive than in urban areas, according to the Bank of Scotland annual rural housing review.
While prices are higher in rural areas, the price gap is reducing as urban house prices increase at a faster rate. Between 2011 and 2016, the average price of a home in the Scottish countryside rose by 14% compared with an average increase of 22% in urban areas.
As a result, the rural-urban premium has narrowed over the last five years from 18% (or £24,228) in 2011 to £17,231 (11%) in 2016.
The most affordable rural local area district (LAD) in Scotland is East Ayrshire with an average house price of £127,646, which is 4.3 times the local average annual earnings of £29,979. Dumfries and Galloway is the second most affordable rural LAD, with an average house price of £133,462 4.6 times the average earnings of £28,960.The Western Isles is Scotland’s third most affordable rural area. Average house prices there are £129,547, 4.7 times the annual earnings of £27,557.
The least affordable rural LADs in Scotland are East Lothian (6.2 times) and Perth and Kinross (5.7 times) (See table 2).
Fewer first-time buyers in rural areas
First-time buyers account for 45% of all mortgage financed purchases in Scottish rural areas. This is lower than in urban areas where first-time buyers account for half (51%) of such purchases. Affordability is the key factor behind the lower level of first-time buyers in rural areas.
Getting on the rural property ladder is at its most challenging for first-time buyers in East Lothian where they account for only 37% of buyers. Scottish Borders, Argyll and Bute and the Highlands also sit below the Scottish average. (See table 3)
Graham Blair, Mortgage Director at Bank of Scotland, said: "Our How Scotland Lives research has shown that countryside living can have a positive impact on peoples’ happiness, so it’s to be expected that people will be attracted to living in the countryside and this does come with a premium.
“Affordability is often a key driver in any decision to purchase a home, with some rural regions more affordable than certain urban locations there are options for anyone considering an escape to the country.”