The value of rural amenities

AimThe point that rural housing is the least affordable in the UK is firmly made in both the academic and policy research literature. This is leading to a rapid drift of young people in particular and low-income earners out of rural areas into urban communities. The consequences of such out-migration on rural health and vitality as well as on urban congestion and so forth have also been widely explored. This is a pernicious phenomenon that is longing for a solution. A clear understanding of the variety of factors that influence rural house prices is a prerequisite to prescribing far reaching policy solutions to this problem. Curiously, to date, very few in-depth studies have sought to explore the unique inflationary effects of rural attributes on rural housing affordability. This study contributes to filling this gap by measuring, in quantitative terms, the unique contributions of rural amenities on rural house prices. Specifically, the primary aim of the project was to investigate the complexity of rural housing markets and the impacts of rural amenities on rural house prices. Especially, the study examines the homogeneity of rural markets, the supply of rural housing and dynamics of rural house prices in comparison to adjacent urban settlements and the value placed on specific amenities in urban and rural housing markets.MethodologyThe methodology included: A survey of rural literature and housing studies; Analysis of secondary housing data including construction of a rural housing index and collection and hedonic analysis of primary housing market data. The study focused on two contrasting local authorities categorised as rural areas but both containing a mixture of urban and rural settlements and isolated housing. The areas were chosen to be the most expensive rural local authority (Amersham) and the most expensive rural local authority outside the South East (Bridgnorth).Resultsi. The growth in price within rural markets is on average higher than for urban markets and particularly during the recent downturn, rural house prices have held their values better than urban house prices.ii. The differences in the price of rural and urban property can largely be explained by the balance of availability of different types of property.iii. There was some evidence that there is a small rural premium unexplained by differences in house type mix. iv. Some amenities such as large plots and extra bedrooms are valued more highly in urban markets; others such as pre 1914 character housing, condition and outbuildings housing are more valued in rural markets.v. Modelling urban and rural properties as separate markets gave significantly better understanding of the sources of the problem than when they are analysed together. Models with rural premium dummy also performed well.Conclusions and Recommendationsi. The results show that “rural” local authorities contain a mix of settlement types and to base policy on aggregate prices at local authority level will mask real rural housing shortages and the need for local housing. This implies that understanding of local housing need requires detailed study within each local authority. Targeting of national funding to achieve rural housing goals should therefore be formed from an amalgamation of local studies.ii. Provision of affordable housing in rural areas could be facilitated by adjusting the supply characteristics and a focus on providing entry level housing in villages, hamlets and isolated areas based on anticipated household formation.iii. Valuers can use urban comparables to value rural property in adjacent villages in the study area but should be aware of the small differences in emphasis in amenity values. In general valuers should be aware that urban and rural markets show variation in valuation of property characteristics.iv. Further research is needed to extend the breadth of this research to more rural areas in order to develop more robust conclusions. This is particularly important as there were differences in the findings for the two study areas in this analysis