Buying cheaper than renting for first-timers
The average monthly costs associated with buying a three bedroom house in the UK for a first-time buyer was £666 in June 2015. That is 8% – or £56 – lower than the typical monthly rent of £722 on the same property type.
In contrast, in June 2009, during the financial crisis, the average cost of buying was 16% – or £1,154 per year – more than the average rent paid.
Even though the average price paid by first-time buyers for a three bedroom house is 25% higher than six years ago, the monthly costs of owning has come down as the average mortgage rate has fallen to 2.91% from 4.92%. Average rents have grown by 23% in the same period.
With the price of a typical first-time buyer home rising by 8%, the difference between the cost of owning versus the cost of renting has narrowed over the past year, from £85 in 2014 to £56 in 2015 – a fall of 34%.
This is partly as a result of average monthly mortgage costs rising by £40 while average monthly rents have only increased by £8.
Craig McKinlay, mortgage director at Halifax said: “While numbers of first-time buyers getting on to the housing ladder in the first six months of both 2014 and 2015 has been over 135,000 – almost double the lows seen in 2009 – the issue of building more new homes in the right places needs to be addressed if we are to see sustainable growth.”