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Homeowners are £900 a year better off than renters

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21/09/2013
UK homebuyers are nearly £900 a year better off than their renting counterparts, according to research by Halifax.
Homeowners are £900 a year better off than renters

The average monthly costs associated with buying a three bedroom house stood at £672 in June 2013, £73 (or 10%) lower than the typical monthly rent of £745 paid on the same property type. 

The percentage difference between the monthly cost of buying and renting has fallen marginally from a year earlier.

However, five years ago renting was considerably financially more attractive than buying.

In June 2008, the average monthly cost associated with home buying was £352 (49%) higher than renting – equivalent to an annual cost difference of £4,226.

The substantial improvement in the affordability of buying relative to renting since 2008 largely reflects a 37% decline in home buying costs over the past five years.

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 homebuyers in the 12 months to June 2013 was nearly half of that in 2008, which will have been constrained by worries over job security.

“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 report also found that the average mortgage rate for a new borrower has fallen by 2.31% over the past five years from 5.88% in June 2008 to 3.57% in June 2013.

While the average house price has fallen by 13% over the same period, the typical rent paid has increased by 13% (£88) since June 2010.

Buying a house is more affordable than renting in all but two regions in the UK.

Average monthly buying costs in both Yorkshire and the Humber and Wales are marginally higher (1%) than average monthly rental costs.

 

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