Rural property prices outstripping urban values

Property investors looking to expand their portfolios could be excused for ignoring inner city areas and instead look to the rural idylls of the UK countryside if they want to improve their rental yield. At least that is the possibility raised by the Halifax Bank’s latest report on the UK housing market.

Widening gap

According to the Halifax report organising cheap property insurance on a rural home may see the homeowner realise big profits when he comes to sell. The report suggests that rural properties have realised 35% higher prices than those in urban areas over the last decade. The report gives the average price of a rural dwelling to be just over £196,000 while the average price for a home in urban UK comes in at under £170,000. The difference is £7000 more than a decade ago, and appears to be widening.

Local people forced out of market

The report seems to suggest that buyers with an interest in holiday home insurance and pensioners looking for a quiet retirement are driving the house prices up, which is leaving young local people facing the fact that they may never afford to buy a home in the village they were brought up in. According to the Halifax very few first time buyers buy properties in rural settings.

Dorset, Devon and Cornwall

It is the South West of England where rural property prices are escalating the quickest, with eight out of the top ten rural hot spots including West Dorset, Mid Devon, the South Hams and East Dorset all featuring high up the list. In West Dorset the average price of a property is now eight times the average annual wage of the area. This is double the UK average and virtually excludes young locals from the property market. In all the other top areas the frequency of first buyers is exceedingly low which suggests that homes are being bought by people outside the area.

Window of opportunity

For landlords of course this can be viewed as an opportunity. It is no coincidence that the South West with its beautiful countryside and vast sandy beaches is attracting such attention. An investment in a holiday home that can be rented out to holiday makers in the summer and local people in the winter and promises to grow in value every year may prove to be tempting for many urban property owners.