House prices in rural areas have risen by 22% over the last five years, compared to 17% in urban areas. Rural semi-detached properties saw the highest rate of price growth, while urban flats experienced the weakest.
Andrew Harvey, Nationwide’s senior economist, said: “Our latest analysis suggests that average house price growth in local authorities classified as predominantly rural has continued to outpace those of other areas. Between December 2018 and December 2023, average prices in predominantly rural areas increased by 22%, compared with 17% in predominantly 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, reflecting the rise in borrowing costs, which have added to affordability pressures.
“Despite rural areas performing better overall, only eight out of the 20 top-performing local authorities in 2023 were classed as predominantly rural. This includes tourist hotspots such as Devon (South Hams and East Devon) and Westmorland & Furness in the Lake District. This suggests some of the demand may be driven by those buying holiday or second homes. Indeed, ONS data suggests second home ownership is significantly above average in South Hams.
“We’ve used the ONS’ broad rural-urban classification, which looks at the proportion of the population in local authorities living in different area types. 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. In ‘predominantly urban’ local authorities, 75% or more of the population are either in towns or cities.”
In 2023, the top-performing local authorities included Eilean Siar in Scotland (13% growth, average price £158,638), East Renfrewshire in Scotland (10% growth, average price £304,160), and South Hams in the South West (6% growth, average price £425,284).
Rural semi-detached properties saw the strongest price growth over the last five years, with average prices increasing by 24%. Rural terraces increased by 23%, as did urban semis, while rural detached properties increased by 22%. Flats saw considerably weaker price growth, particularly those in urban areas, which increased by just 5%.
