Page last updated at 23:14 GMT, Friday, 11 September 2009 00:14 UK

Rural house prices 'fell by less'

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Rural housing was less affordable than urban areas

House prices in rural areas have fallen by less than in urban areas over the past year, new figures from the Bank of Scotland show.

The bank's annual Rural Housing Review said prices across rural Scotland fell by 11% over the past 12 months compared to an average 13% drop in urban areas.

Houses in cities and towns remain more affordable than in the countryside.

The average rural house price is now 17% higher, at £166,813, than the average urban house, which is £143,454.

The Bank of Scotland report said housing affordability in rural areas had improved.

Prices now averaged 5.7 times the average income, the lowest ratio since 2006.

Quality of life

First-time buyers purchased 28% of all homes sold in rural areas but the rise was still well short of the 41% for urban houses.

Suren Thiru, economist at Bank of Scotland, said: "Over the past year, house prices in rural Scotland have declined by less than in urban areas, largely reflecting the quality of life benefits associated with living in the countryside.

"However, homes in rural areas continue to command a large premium over urban locations, which together with generally lower earnings, means that housing in rural areas remains significantly less affordable than in urban areas.

"The difficulties this presents for households is further aggravated by the relatively low levels of social housing in rural local authorities."

Price growth

Aberdeenshire was the most expensive rural local authority in Scotland with an average house price of £191,558.

The second most expensive rural local authority was East Lothian, followed by Perth and Kinross.

East Ayrshire was the most affordable rural area in Scotland with an average house price of £124,091.

Moray and Dumfries and Galloway have the highest proportion of first-time buyers at 36%.

In the past 10 years house prices in rural areas have risen by 142%, or £97,849, compared with a 122% rise in urban areas.

The rural local authority of Highland recorded the biggest house price growth since 1999, at 190%.

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