Last updated 05:46, Friday, 19 September 2008

Homes in rural areas like much of Cumbria cost 15 per cent more than properties in urban areas, pricing many first-time buyers out of the market, figures have shown.

Exclusive: First-time buyers are being priced out of Cumbrian villages like Caldbeck

The average cost of a home in a rural area of Great Britain is £235,324, compared with around £204,290 in towns and cities, according to Halifax Estate Agents.

A combination of higher house prices and lower wages also means property in rural areas is less affordable than in urban regions, with homes costing an average of 7.3 times average annual local earnings, compared with 6.1 times annual pay in towns.

Rural affordability is even more stretched in certain areas of the country, with North Devon the least affordable rural area, with property prices averaging 9.1 times annual local earnings.

The 10 least affordable rural areas of the country all have house prices which are at least eight times higher than local pay.

But even the most affordable rural location of Copeland in Cumbria still has a house price-to-earnings ratio of 3.9 times local salaries, when lenders will traditionally only advance mortgages of three times a borrower’s pay.

Unsurprisingly, given the high level of rural house prices and stretched affordability, first-time buyers are struggling to get on to the property ladder in rural areas.

People buying their first home account for just 21 per cent of all buyers in rural areas, compared with 37 per cent in urban areas.

Their share of the market is even smaller in some local authorities, with first-time buyers accounting for just seven per cent of all buyers in some areas.

The problem is exacerbated by a lack of social housing in rural areas, with this accounting for just 13 per cent of the rural housing stock, compared with 20 per cent in towns and cities.

Suren Thiru, economist at Halifax, said: “Housing in rural areas is less affordable than in urban areas due to a combination of higher average prices and lower average earnings.

“The difficulties for home buyers in rural locations are particularly acute among first-time buyers and are exacerbated by relatively low levels of social housing provision.”

Pendle in Lancashire is the cheapest rural local authority in which to buy a property, with homes there averaging £129,887, despite prices soaring by 80 per cent during the past five years.

It is followed by the Western Isles and Copeland with average prices of £137,319 and £138,111 respectively.

The Department for Communities and Local Government said the Government had already taken steps to help people get on to the housing ladder in rural areas.

A spokesman said the solution lay in increasing the housing stock in the countryside across the UK.

Changes to council tax on second homes, new rules enabling councils to more easily identify sites for new houses to be built, and increasing the number of Community Land Trusts to deliver affordable housing had all helped to ease the strain on first-time buyers in rural areas, the department said.

“The Government has committed £8 billion for the biggest-ever national affordable housing programme,” a spokesman said.

“Additionally, Defra’s £3.9 billion investment in rural development in England shows that we want to see businesses, jobs and services in the countryside flourish.”