House prices rose at up to three times the national rate in some rural and coastal areas in July, leaving young people and lowly paid workers “at risk of being priced out” of these communities, says the Office for National Statistics.

These rises, along with high private rents in these areas, is “contributing to skill shortages in the tourism and hospitality industries that their local economies rely on”, adds the UK’s official data body.

Despite falling from a record high in June, the average UK house price,£256,000, increased by 8% in July 2021 compared with the previous year.

But in such regions as Conwy in North Wales, house prices jumped by 25% in July, North Devon saw a 22.5% lift, and Richmondshire in the Yorkshire Dales saw a 21.4% rise, continuing a trend seen during the coronavirus pandemic, the ONS says.

By contrast, the seven areas that recorded house price falls in July were all London boroughs. 

The data body says house prices are rising partly because of temporary changes to taxes paid on property purchases, including stamp duty, but they also reflect a shift in consumer preferences with growth being driven by rural and coastal areas. 

It adds that prospective home buyers are looking for more space, with prices for detached houses lifting by 9% in July, rising faster than terraced houses, which rose by 7.7%, or flats, which logged a 6.1% uplift.

The ONS says: “As a result, people living in rural and coastal areas – particularly the young and those on lower incomes – are at risk of being priced out of the housing market.

“This could be contributing to hospitality businesses being unable to fill vacancies, with the industry being predominant in tourist areas and containing a high proportion of young and low paid workers.”

UK private rents increased by 1.3% in the 12 months to August, which rises to 2% when London is excluded, the data body points out.

The fastest rates of rental growth were in the East Midlands, 2.7%, and the South West, 2.6%, while London was the only region to post a fall of 0.4%. 

The imbalance between tenant demand and the supply of lettings may be contributing to the increase in rental prices, suggests a Royal Institution of Chartered Surveyors Residential Market Survey in August.

In the three months to August 2021, Rics reported that tenant demand was accelerating while landlord instructions remained in decline. 

The fall in the supply of lettings was most widespread in the Midlands, the East of England and the South West. 

The ONS says: “It could be that some landlords are trying to capitalise on domestic tourism through holiday lets, leaving fewer long-term lets for prospective tenants.”

Workers in tourist hotspots, where hospitality is the largest employer, earn less on average than people who live there. 

The median hospitality salary for a full-time employee was £22,779 per year in April 2020, which was 28% lower than the national average of £31,461, the ONS points out.

The data body says 34% of under 30s report that they have had at least some difficulty making ends meet in the year to March 2021, the highest percentage of any age group. 

The ONS adds: “This has implications for the industries that tourism economies rely on, such as hospitality which is reporting record levels of job vacancies.”

InvestingReviews.co.uk IFA Simon Lister says: “Unfortunately, as people move away from towns and cities as the homeworking culture takes root, locals who live in the sought-after areas are being priced out at a pace and on a scale never seen before. 

“The pandemic has put immense pressure on lower earners and young people aspiring to get onto the property ladder in the country’s new rural and coastal hotspots.”

Jamie Thompson of Manchester-based Jamie Thompson Mortgages adds: “Anything with extra space has shot up in value. Flats in central Manchester dropped in price last year and struggled to sell, while houses with just a modicum of outdoor space or an extra room saw their values shoot up, as what people wanted from their homes changed. 

“Almost all of my clients are first-time buyers and many are finding they have many more options now than before the pandemic. 

“This is due to them not having been able to spend any money for much of the past 18 months, meaning they have a bigger deposit, and mainstream lenders increasing what many first-time buyers can borrow to 5.5 times their income. 

“Pre-pandemic, most would struggle to borrow more than 4.5 times their income with a 10% deposit.” 

Hargreaves Lansdown personal finance analyst Sarah Coles says: “Life isn’t much easier for renters either. In tourist areas, renters have been hit by landlords switching properties over to more lucrative holiday lets, to take advantage of the boom in the number of people holidaying in the UK.

“It’s a horrible struggle for young people and those on lower incomes in particular, which includes many of those working in the hospitality businesses that dominate the local economy. 

“It has also created a real headache for these small businesses struggling to find staff, as more of their employees leave the area.”