Homebuyers in the UK are financially 10% a year better off that those who rent according to research from Halifax.
The average monthly costs associated with buying a three bedroom house stood at £672 in June 2013, which is £73 or 10% lower than the typical monthly rent of £745 paid on the same property type. This compares with five years ago when renting was considerably financially more attractive than buying. Back in June 2008 buying was 49% more expensive than renting as it cost £352 per month more on average to own an average UK property.
Martin Ellis, housing economist at Halifax, said: "A combination of lower mortgage rates and declining house prices has substantially reduced the cost of buying over the past six years. Nevertheless, the number of home buyers in the twelve months to June 2013 was nearly half of that in 2008, which will have been constrained by worries over job security.”
Buying a house is now more affordable than renting in all but two regions of the UK with the average monthly buying costs in both Yorkshire and the Humber and Wales just 1% higher than the average monthly rental costs. However buying is most affordable compared to renting in Northern Ireland where the typical homebuyer is paying 11% (£47) a month less than the average renter (£369 against £415). In London the average monthly cost of buying is £98 lower than renting.
Ellis said: “We understand that building a deposit is still a key challenge for those looking to get on the ladder, although once this has been achieved, buying is much more affordable. Whilst optimism in the housing market has improved in recent months these factors remain key obstacles to home purchases.”
The combination of lower house prices and mortgage rates have contributed to making home buying more affordable with the average mortgage rate for a new borrower falling by 2.31% over the past five years from 5.88% in June 2008 to 3.57% in June 2013, whilst the average house price has fallen by 13% over the same period. The typical rent paid, however, has increased by 13% (£88) since June 2010.
