NEW research suggests that the type of housing available in rural areas is what most explains its lack of affordability, finds Brian Wilson.

NEW research suggests that the type of housing available in rural areas is what most explains its lack of affordability, finds Brian Wilson.

The Royal Institute of Chartered Surveyors (RICS) has published an intriguing piece of research about house prices, called The Value of Rural Amenities. This was produced for it by Felix Hammond and David Proverbs at the University of Wolverhampton, and Jessica Lamond from the University of the West of England.

Its starting point is the wealth of policy and academic research which demonstrates that rural housing is amongst the least affordable and the serious consequences that flow from that for the vitality of rural communities. What this research then seeks to gain is a clearer understanding of the factors driving rural house prices. To put it another way, which of them are most significant in creating the rural housing premium?

As well as reviewing the existing body of research, the work for RICS involved some fairly complex data modelling and analysis. It focussed its study on two locations that were categorised as rural but included urban settlements, so that local house price comparisons could be made.One was an area in and around Amersham within Chiltern district, which has the highest house prices in the country. The other was Bridgnorth and surrounding villages in the south east of Shropshire, which has some of the highest house prices outside south east England.

As the report acknowledges, further research in other areas would be useful to test the robustness of its findings. The two areas studies may be classified rural, but one is in the London commuter belt and the other not far from the West Midlands conurbation.

Data on house price ranges, house price trends and types of housing stock were analysed, whilst new data were collected about some attributes of housing sold in the two locations. Earlier research suggested various attributes as having an "amenity value" and so likely to add to the housing costs. These were the presence of views, access to open space, access to local services, peace and quiet, clean air and being in a "good" neighbourhood.

The research for RICS finds that the growth in house prices has been faster within rural markets than it has been within urban markets. Indeed, rural house prices have held their value better than urban equivalents during the recent economic downturn.

In the locations examined, though, this research indicates that the bulk of the rural-urban house price differential could be explained by differences in the type of housing available for purchase. In simple terms, the rural areas had more large homes and more detached housing.

As such, it questions the importance of rural amenity value as a factor affecting house prices. That said, it does not dismiss it, noting that housing type cannot explain all the price differential and certain other factors would benefit from further exploration.

The research also found some different factors which were adding value to housing in rural and urban areas. Older character housing, stock condition and outbuildings are particularly valued in rural housing markets, whilst larger plot size and extra bedrooms are particularly valued in urban housing markets.

This very local pattern in housing markets leads the researchers to conclude that aggregate data at a local authority level can mask important differences and so housing need ought to be understand by policy makers in a greater detail.

They also conclude that if the mix of available housing plays is of such relevance then emphasis should be given to increasing the supply of smaller, starter homes in villages (as well as 'entry level' affordable homes in villages). Doing so should narrow the rural-urban price differential.

If further similar research is pursued it would be good to see it focus on less accessible rural areas. Given the finding that housing markets vary so much within districts, there could certainly be much to learn from studying different types of rural area. Indeed, a place with very high amenity value, such as a popular coastal area, could provide real contrast.

Comparison (if it were possible) with a large urban or metropolitan location could also be worthwhile. Amenity value may not explain much of the house price differential at a very local level within a rural classified area, but it may count for more if comparing with a highly urbanised area.

The research certainly raises some interesting and policy-relevant questions. If readers of RSN Online have evidence from their patch, it would be interesting to hear about it. Just how important does rural amenity value appear to be in inflating house prices?

This article was written by Brian Wilson whose consultancy, Brian Wilson Associates, can be contacted at brian@brianwilsonassociates.co.uk. Brian also acts as RSN Research Director.

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