Scottish rural housing is less affordable: UK Property Shop News

House prices in rural areas are significantly less affordable than in urban areas, according to the Bank of Scotland Rural Housing Index. The average property price in rural areas in Scotland is 4.6 times average annual earnings compared with a ratio of 3.9 in urban areas. There are fewer first-time buyers (FTBs) in rural areas, accounting for only 24% of all buyers compared with 34% in urban areas.

The least affordable rural local authority in Scotland is East Lothian, where the average house prices of £184,075 is 7.3 times local annual average earnings of £25,386 per annum. East Lothian's average house price of £184,075 is also the highest of any of Scotland's rural local authorities. East Ayrshire is the most affordable rural local authority in Scotland, with an average house price of £97,638, 3.9 times local annual average earnings of £24,887 per annum.

The average house price in a Scottish rural area is £140,778. This is 13% higher than urban house prices, which average £124,895. On average rural house prices grew by 103% in the last five years. This is greater than the 98% rise in house prices experienced in urban areas.

Commenting Tim Crawford, Group Economist at Bank of Scotland said: "Housing market conditions are harder for those living in rural areas. Firmer house prices combined with lower average earnings mean that property is less affordable than in urban areas. This means it is quite difficult for first-time buyers to climb onto the property ladder whilst, at the same time, there is less provision of social housing in rural areas."

KEY FINDINGS

Affordability: housing is less affordable in rural areas

House prices in rural areas are significantly less affordable than in urban areas. The average property price in rural areas is 4.6 times average annual earnings compared with a ratio of 3.9 in urban areas. This difference reflects the combination of generally higher property prices and lower average earnings in rural areas.

The least affordable rural local authority is East Lothian, where house prices (£184,075) are 7.3 times average earnings (£25,386 per annum).

After East Lothian, the next least affordable districts are Scottish Borders with house prices being 5.8 times average earnings, Highlands with an affordability ratio of 5.4 and Perth & Kinross with an affordability ratio of 5.4.

East Ayrshire is the most affordable rural local authority in Scotland, with house prices (£97,638) being only 3.9 times average earnings (£24,887 per annum).

First Time Buyers: far fewer FTBs than in urban areas

Affordability difficulties are the key factors behind the lower level of first-time buyers (FTBs) in rural areas. FTBs account for only 24% of all buyers in rural local authorities compared with 34% in urban local authorities.

The rural districts with the fewest first time buyers was East Lothian, where first time buyers represented only 18% of the housing market, followed by Scottish Borders with 21% first time buyers and Highlands with 23% first time buyers.

Argyll & Bute had the highest proportion of first time buyers (27%), followed by East Ayrshire with 27% of the housing market being first time buyers and Moray with 26% first time buyers.

Rural House Prices: 13% higher than urban house prices

The average house price in a Scottish rural area is £140,778. This is 13% higher than urban house prices, which average £124,895.

East Lothian is the most expensive rural local authority in Scotland with an average house price of (£184,075).

The next most expensive rural areas are Scottish Borders where prices average £148,995, Perth & Kinross (£141,381) and Highlands (£140,041).

The least expensive rural local authority in 2005 was East Ayrshire where the average price of a house was £97,638.

Growth in Rural House Prices 2000-2005: higher than in urban areas

On average rural house prices grew by 103% in the last five years, from £69,407 in 2000 to £140,778 in 2005. This is greater than the 98% rise in house prices experienced in urban areas from £63,142 to £124,895.

The rural local authority with the strongest growth in house prices in the last five years was Highlands. Here prices rose by 134%, from an average house price of £59,796 in 2000 to £140,041 in 2005.

Other high growth rural local authorities include: Scottish Borders, where house prices grew by 121%; Dumfries & Galloway, where house prices grew by 106%; and East Lothian, where house prices grew by 105%.

The rural local authority with the weakest growth in house prices was Aberdeenshire, where the average house price grew by only 75%, from £79,325 in 2000 to £138,924 in 2005.

Social Housing: Rural Areas have less Social Housing

In rural areas, only 22% of housing is social housing. This compares to urban areas where 31% of the housing is social housing.

East Ayrshire has the most social housing of any rural local authority, 28% of its housing stock. After East Ayrshire, East Lothian has the most social housing 21%, followed by Moray with 16% and Highlands with 14%. Perth and Kinross has the least amount of social housing (13%).

Second Homes: Seven times more Second Homes in Rural Areas

In rural areas, 3.5% of the homes are second homes. This compares to urban areas where only 0.5% of the homes are second homes.

11% of the homes in Argyll and Bute are second homes, the highest percentage of any rural area in Scotland. Highlands follows with 6%, then Perth & Kinross with 3% and Dumfries & Galloway with 2%. East Ayrshire has the fewest second homes with only 0.2% of homes being second homes.