House price rises in rural areas outperform urban locations

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published 13 May 2022

As house prices go up, we look at where they are rising the fastest.

House prices have risen faster in rural areas than in urban locations over the past five years, according to analysis by Nationwide Building Society.

Property values in areas that are mainly rural rose 29%, while those in predominantly urban areas increased 18%.

The coronavirus pandemic and more flexible working opportunities have prompted some people to relocate to more rural areas in recent years.

In general, rural detached homes have seen the strongest rates of price growth, while urban flats have recorded the weakest price increases, said Nationwide.

Between December 2016 and December 2021, rural detached properties increased in price by 32% on average, while urban flats typically added 6% to their value. Rural areas performed particularly well last year: average house prices in predominantly rural areas rose by more than 12% in 2021, double that seen in 2020.

“Increased demand for properties in rural areas in recent years has been part of the ‘race for space’ seen since the start of the pandemic,” said Andrew Harvey, a senior economist at Nationwide. “This shift in preferences is also reflected in price trends by property type, with rural detached properties seeing the strongest price growth [over the past five years].”

Thirteen of the top 20 local authorities for house price growth last year were classed as rural, with North Devon taking the top spot. Camden in London was the best-performing urban authority.

Nationwide said that most people who had recently moved or were looking to move were choosing less urban areas. This was especially true for older people.

Some areas closely associated with tourism, including parts of Devon, South Wales, the Cotswolds and the Norfolk Broads have seen some of the biggest price jumps recently, the report said.

This could suggest demand is being driven by those buying holiday homes, or second homes.

Here are the top-performing local authority areas for house price growth in 2021, according to Nationwide, along with their urban/rural classifications. The figures show average house prices in December 2021 and the annual price increase:

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Local authority area	Rural/urban	Average house price	Annual price increase
North Devon, South West	Rural	£326,848	24%
South Hams, South West	Rural	£420,851	22%
Rushcliffe, East Midlands	Rural	£355,398	22%
Ceredigion, Wales	Rural	£244,619	21%
Camden, London	Urban	£947,511	20%
Hastings, South East	Urban	£271,432	19%
Pembrokeshire, Wales	Rural	£231,355	19%
South Norfolk, East of England	Rural	£330,003	19%
Cotswold, South West	Rural	£481,402	19%
Nan Eileanan Siar, Scotland	Rural	£144,755	19%
Torridge, South West	Rural	£293,098	18%
Vale of Glamorgan, Wales	Urban	£287,199	18%
Mid Devon, South West	Rural	£287,337	18%
Eastleigh, South East	Urban	£339,946	18%
Broadland, East of England	Urban with significant rural aspects	£319,182	18%
Hyndburn, North West	Urban	£120,038	17%
Somerset West and Taunton, South West	Rural	£286,910	17%
Maldon, East of England	Rural	£399,937	17%
East Hampshire, South East	Rural	£451,320	17%
Wyre Forest, West Midlands	Urban with significant rural aspects	£241,109	17%

Will house prices continue to rise?

A survey by RICS (opens in new tab) (Royal Institution of Chartered Surveyors), released on the same day as the Nationwide data, paints a cautious picture about future house price growth. While the cost of living crisis has yet to impact house prices, the outlook is far from certain.

Estate agent expectations of sales in the next 12 months have fallen for four consecutive months, according to the RICs survey, while agreed property sales have started to flatten.

Andrew Wishart, senior property economist at the consultancy Capital Economics, said that with mortgage rates forecast to increase sharply this year, “the days of the pandemic house price boom are now numbered”.

He added: “Higher interest rates will soon put the brakes on demand, and cause house prices to drop by a total of 5% between the end of this year and the end of 2024.”

Additional reporting: PA

Ruth Emery is contributing editor at The Money Edit. Ruth is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times. A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service. Outside of work, she is a mum to two young children, a magistrate and an NHS volunteer.