Capital appreciation: rural properties beat urban units for price growth

House prices in predominantly rural areas have risen by 23% over the last five years, compared to 18% in predominantly urban areas, says the Nationwide.

And while rural terraced properties have seen the strongest rate of price growth, urban flats have suffered the weakest.

Commenting on the figures, Andrew Harvey – Nationwide’s senior economist – says: “Average house price growth in predominantly rural local authorities has continued to outpace that in predominantly urban areas. Between December 2019 and December 2024, house prices in predominantly rural areas increased by 23%, compared with 18% in predominantly urban areas. Local authorities classified as ‘urban with significant rural’ saw price growth of 22% over the same period.”

Nationwide used the government’s broad rural urban classification, which identifies the proportion of the population living in different area types for example ‘predominantly rural’ as more than half of the population live in rural settlements or market towns (so for example Cotswold, North Norfolk, Rutland and Shropshire; or ‘Urban with significant rural” defined as 26% to 49% of population living in either rural villages or market towns, such as Ashford, Bedford, Boston or Stroud.

It also looked at the ‘predominantly urban’ category with 75%+ of population are either in towns or cities – for example Derby, Exeter and Norwich.

Harvey continues: “The pandemic had a significant impact on housing demand during 2021 and 2022, with our research at the time pointing to a shift in preferences towards more rural areas, particularly amongst older age groups. Whilst these effects have now faded, less urban areas have continued to hold the edge in terms of house price growth.

“In our latest housing market survey, we focused on homeowners who have moved in the last five years. Our findings indicate that the majority (63%) of house moves were within the same type of area, with the biggest flow being within large towns or cities. Around 9% of moves were from towns / cities to rural areas (villages or hamlets), although this was partially offset by 7% who moved from rural to more urban areas.

“However, amongst those who moved to a different type of area, there was a significant difference by age group, with younger people (those aged 25-34) tending to move to more urban areas, whilst older age groups, particularly 55+, favouring more rural areas.

“Our survey data shows that a bigger property or garden was the top reason cited by those moving in the last five years, which may in part reflect the ‘race for space’ seen during the pandemic.

“Indeed, a third of survey respondents (33%) purchased a detached property, with just 15% buying a flat. Looking at the flows between property types, it appears the majority of home movers ‘traded up’.

“Amongst those buying in rural locations, 41% of those surveyed bought a detached house, with a further 29% buying a semi-detached. But it is actually rural terraced properties that have seen the strongest price growth between December 2019 and December 2024, with average prices increasing by 25%.

“Rural semi-detached also increased by 25% over the same period, with urban semis seeing a 24% rise. Meanwhile, rural detached properties increased by 21%. Flats saw considerably weaker price growth, particularly those in predominantly urban areas, which increased by just 6% over the last five years.”

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