£120 a month cheaper to buy than rent says Halifax research
The cost of buying a home in the UK is 16% lower than renting, according to research by Halifax. The average monthly costs associated with buying a three bedroom house stood at £621 in December 2012; £120 (or 16%) lower than the typical monthly rent of £741 paid on the same property type. Over the course of a year this is equivalent to a saving of £1,440.
The gap between the costs of buying and renting has widened by £21 per month over the past year. At the end of 2011, the monthly costs associated with home buying was £99 (14%) lower than renting. Over the past year, buying costs have risen by 1%, while the cost of renting has increased by 4%.
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Buying a house is more affordable than renting in all 12 UK regions. Buying is most affordable compared to renting in London with the typical homebuyer paying 15% (£193) a month less than the average renter (£1,101 against £1,294). In Yorkshire and the Humber there is virtually no difference, with average monthly buying costs just £1 lower than average monthly rental costs (£482 against £483).
Martin Ellis, housing economist at Halifax, commented: "The sharp decline in home buying costs over the past few years, combined with a significant increase in rents, has greatly improved the financial attractiveness of buying a home. This shift has contributed to the increase in the numbers of house purchases, which reached a five year high in 2012.
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"Despite this pick-up, home buying levels remains well below the levels at the height of the market. Today, concerns over job security and raising a deposit are the main obstacles to people buying their own home. However, it is worth noting that once homebuyers are on the first rung of the ladder, their monthly costs are notably lower."
5 Comments
by timplymouth
Monday, February 18 2013, 2:40PM
“More propaganda from the Herald. Mortgages are only cheaper if you have a huge deposit. If you have a 5% deposit the rent and mortgage payments are _currently_ about the same. However if interest rates go up, mortgage payments go up. Also there is a big risk of negative equity. You also have to consider the fact that when you rent you are not responsible for building maintenance. If the central heating breaks down, the landlord fixes it. So you're comparing apples with oranges.”
by OscarDelta
Monday, February 18 2013, 1:37PM
“It's all simple supply and demand, any economist will tell you that Keynes was right and market forces will always iron out any anomalies. If there's a demand for something with a limited supply, the cost will rise. If demand falls, so does cost. Simples.”
by Despairing2
Monday, February 18 2013, 1:31PM
“iamajc - it is not only the time to save the deposit, it is then having a sufficient income for the bank/building society to grant you a mortgage. The recession should have seen an 'adjustment' (significant reduction) to the inflated house prices people have to pay, unfortunately the prices have been kept artificially high by 'buy to let' landlords, who benefit at the expense of others.”
by devonguy7
Monday, February 18 2013, 12:59PM
“Thats why i have 4 properties in my portfolio as a buy to let. Thinking of my children's future. They only deserve the best. Guaranteed income and properties for life.”
by iamajc
Monday, February 18 2013, 12:44PM
“Whilst it may be cheaper to buy you do need to have the £20000+ required for a deposit handy in the first place nowadays. Which given the average wage in this part of the country could take a few years of saving to get, even in households where there are two people working.”