House prices soar in rural areas as people quit city life

House prices in small towns and villages have risen almost twice as much as those in cities over the past year, according to a new study.

The study by the Resolution Foundation reflects both the pandemic prompting people to choose to live and work outside of busy cities, and the Stamp Duty Holiday.

The Foundation’s quarterly Housing Outlook examines the impact of the Covid-19 crisis on housing demand across the UK, and considers what might be driving the disparity in house price growth between different types of areas.

The report finds that, while average house prices have risen in the UK since the start of the pandemic, it has been the least densely populated areas of the UK that have seen the biggest price increases.

Since February 2020, prices have jumped by over 10% in the least dense tenth of local authorities in the UK, compared to rises of ‘only’ 6% for the most populous deciles.

The Outlook also finds evidence of so-called ‘urban flight’ (in which workers opt to leave urban areas in favour of more rural locations) from the UK’s biggest cities such as London, Manchester and Birmingham to the hinterlands.

In London, for example, house prices in Outer London rose by an average of 7% since February 2020, compared to just 2% on average for those in denser Inner London.

Similarly, house prices have risen by 9% in small towns and villages, compared to 6 per cent in the UK’s 12 biggest ‘core’ cities.

However, the Foundation cautions that it far too early to tell whether this pandemic trend will prove be a long-term one for the UK.

One-in-five children in low-income households spent the first lockdown in an overcrowded home, and people of all age groups are more likely to live in overcrowded conditions today than they were 20 years ago, with the largest increases among families with children.

Ensuring that all families have access to the space they need should remain a priority going forwards says the Foundation.

The report comes as a survey revealed more than half of people who live in urban areas and city centres are considering moving to a different location, as a result of the pandemic.

‘House prices have risen throughout the UK during the pandemic, but prices in less densely populated areas have seen much bigger increases than those in dense urban areas. This suggests that workers are choosing to move away from crowded cities, and into more rural areas,’ said economist Cara Pacitti.

‘The impact of repeated lockdowns, during which people were confined in their homes for long periods of time, also appears to be turning buyers away from smaller, more crowded properties and setting their sights on spacious family homes.

‘It’s too early to say whether this move away from cities will be a long-term trend. But for many families, escaping to the country is no more than a pipe dream, and the overcrowding that they have faced during the pandemic must to be addressed.’

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