The new index comes at a time when rural housing is moving up the political agenda. Only last week, the government established the Affordable Rural Housing Commission with a brief to consider rural housing issues and recommend solutions.
The main findings from the Halifax English Rural Housing Index are:
FTBs have declined from 27% (1994) to 16% (2004) of the total number of housing transactions in rural areas. Over the same timeframe, the number of FTBs in urban areas has fallen from 41% to 35%.
The highest proportion of FTBs in a rural LA can be found in Forest Heath (East of England) where FTBs account for 43% of housing transactions. East Dorset (South West) has the lowest proportion of FTBs (7%) of any rural LA in England.
Of the 10 most expensive rural LAs in England, six are in the South East. The other four LAs are: Uttlesford (East of England), East Hertfordshire (East of England), East Dorset (South West) and Rutland (East Midlands).
The most expensive rural LA is Chiltern where the average house price last year was £409,242. Chiltern also recorded house price growth of 20% in 2004. In 1994, the average house price in Chiltern was £116,716 - a 251% over the last ten years.
The least expensive rural LA is Pendle in Lancashire where the average house price is £98,511, an increase of 114% since 1994.
North Cornwall is the least affordable rural LA in England. The average house price there is £217,276, almost 14 times average local earnings (£15,995). Copeland in Cumbria is the most affordable rural LA in England. The average house price there is £110,422, almost 5 times average local earnings (£22,942).
The average house price to earnings ratio for rural properties in England was 9.2 in 2004. The highest English average house price earning ratios in rural LAs after North Cornwall are in Waverley (12.5), Penwith (12.4), Rutland (12.4) and Restormel (12.4).
Housing in rural areas has outperformed the rise in urban house prices over the last ten years. In 1994, the average rural house price was £85,308 rising by 171% to £231,053 in 2004. In comparison, the average urban house price has risen by 166% over the last ten years — from £73,960 in 1994 to £197,051 in 2004.
One of the reasons rural house prices have outperformed the price rise in urban properties is because the mix of property types in rural areas is different. A higher proportion of the rural housing stock is made up of detached properties (36%) compared to 17% in urban areas. Detached properties also typically trade at a premium.
There is less availability of social housing in rural areas to help bridge the affordability gap. Only 13% of the rural housing stock is made up of social housing compared to 22% in urban areas.
The highest proportion of social housing (25%) in an English rural LA can be found in Kennet (South West). Wealden (South East) is the English rural LA with the lowest proportion of social housing (7.5%).
The proportion of the rural housing stock accounted for by second homes is over four and a half times greater than that in urban areas. Second homes account for 1.4% of rural housing stock, while second homes account for 0.3% of urban properties.
11% of the housing stock in South Hams in the English Riviera are second homes making it the English rural LA with the highest proportion of such properties.
On 20 July 2005, the Department for Environment, Food and Rural Affairs (Defra) and the ODPM established the Affordable Rural Housing Commission. The Commission for Rural Communities is expected to present the findings from its own inquiry to the Affordable Rural Housing Commission in November 2005.
Martin Ellis, Chief Economist at the Halifax, said: "It is very difficult for first time buyers to get onto the housing ladder in rural areas. Prices are higher than in urban areas and the number of rural first time buyers is in serious decline."
