Rural house prices decline less than in urban areas

House prices in rural areas have fallen by less than in urban areas over the past year, according to the latest annual Halifax Rural Housing Review.

The average house price across rural Great Britain fell by 13% over the past 12 months compared to an average 18% drop in house prices in urban areas. The average rural house price of £203,535 is now 21% higher than the average urban house price of £168,376 compared to 15% higher a year ago.

Housing affordability in rural areas improves over the past year

The decline in house prices has improved housing affordability in rural areas. Rural house prices in 2009 are, on average, just over six times average gross annual earnings - the lowest ratio since 2002. However, housing in rural areas remains markedly less affordable than in urban areas. The average property price in rural areas is 6.3 times average annual earnings compared to a ratio of 5.2 in urban areas.

First-time buyers account for more than a quarter of all rural home buyers

27% of all home buyers with a mortgage in rural areas are first-time buyers (FTBs); the highest proportion since 2000. Nonetheless, there are still far fewer FTBs in rural areas with FTBs accounting for 44% of all buyers in urban local authorities.

The provision of social housing is significantly lower in rural England than in urban areas

13% of the rural housing stock in England was social housing in 2008 compared with 19% in urban areas.

Suren Thiru, economist at Halifax, said: "Homes in rural areas continue to command a marked premium over urban locations, partly reflecting the quality of life benefits that many people associate with living in the countryside. Higher prices, together with generally lower earnings, mean that housing in rural areas remains significantly less affordable than in urban areas. The difficulties this presents for households living in the countryside are further aggravated by the relatively low levels of social housing in rural areas."