House prices in areas which are mainly rural have increased at a faster rate than those in urban locations over the five years to the end of 2023, according to analysis by a building society.
Property values areas classed as predominantly rural have risen by 22% over the past five years, compared with a 17% increase in urban areas, Nationwide Building Society said.
Andrew Harvey, Nationwide’s senior economist, said: “Our latest analysis suggests that average house price growth in local authorities classified as predominately rural has continued to outpace those of other areas.
“Between December 2018 and December 2023, average prices in predominately rural areas increased by 22%, compared with 17% in predominately urban areas.
“Local authorities classified as ‘urban with significant rural’ saw price growth of 19% over the same period.”
Average house prices across both urban and rural areas declined a little overall during 2023, which reflects the rise in borrowing costs, which have added to affordability pressures— Andrew Harvey, Nationwide
He added: “Average house prices across both urban and rural areas declined a little overall during 2023, which reflects the rise in borrowing costs, which have added to affordability pressures.”
Nationwide used the Office for National Statistics’ classifications for its research.
In local authorities classed as “predominantly rural”, more than half of the population live either in rural settlements or market towns. In authorities classed as “urban with significant rural”, between 26% and 49% of the population live in either rural villages or market towns, Mr Harvey said.
In “predominantly urban” local authorities, 75% or more of the population are either in towns or cities.
Mr Harvey said that of 349 local authorities in Britain, 212 are classified as predominately urban, 89 as predominately rural, while the remaining 48 are classed as urban with significant rural.
He continued: “Increased demand for properties in rural areas over recent years has been part of the ‘race for space’ seen during the pandemic.
“However, it is actually rural semi-detached properties that have seen the strongest price growth between December 2018 and December 2023, with average prices increasing by 24%.”
The figures exclude Scottish local authorities because of data availability, he said.
The report was released as analysis by property firm Hamptons indicated that just under a third (32%) of new homes sold across England and Wales last year found a buyer before they were built, marking the lowest proportion since 2013.
Hamptons said higher mortgage rates have reversed coronavius pandemic trends, with bigger homes recording particularly sharp falls in “off-plan” sales.
Just 22% of detached homes and 31% of semi-detached homes were sold before they were built, recording an eight and 10 percentage point fall respectively between 2022 and 2023.
Higher mortgage rates have introduced a new barrier in the form of unaffordable repayments and have pushed buyers towards smaller, more affordable homes that are often second-hand— David Fell, Hamptons
An estimated 45% of flats were sold off-plan last year, a figure which was down by five percentage points.
David Fell, lead analyst at Hamptons, said: “In what’s a cash-intensive business, house builders typically borrow to build homes, paying it back when they’re sold.
“But with more homes only sold after they’re finished, it means developers are borrowing money for longer and at higher interest rates.”
He added: “Higher mortgage rates have introduced a new barrier in the form of unaffordable repayments and have pushed buyers towards smaller, more affordable homes that are often second-hand.”
The index uses home sales data from Hamptons’ parent company the Connells Group, as well as Land Registry house sales figures.
