The Halifax reports that it is now cheaper to buy property in the United Kingdom (UK) than it is to rent, with monthly mortgage payments some 16% less expensive than rent for properties of similar size, condition and location. The study shows that the situation is the same in all 12 regions of the country and is being driven by a decline in home sales while rents continue to rise. Even so, lack of job security, inability to raise a down payment and strict lending conditions are still keeping sales low. For more on this continue reading the following article from Property Wire.
The cost of buying a home in the UK is 16% lower than renting, according to new research by the Halifax.
The average monthly costs associated with buying a three bedroom house stood at £621 in December 2012, some £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 research also shows that 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 or 14% lower than renting. Over the past year, buying costs have risen by 1%, while the cost of renting has increased by 4%.
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% or £193 a month less than the average renter at £1,101 against £1,294. In Yorkshire and the Humber there is virtually little difference, with average monthly buying costs just £1 lower than average monthly rental costs of £482 against £483.
Claim up to $26,000 per W2 Employee
- Billions of dollars in funding available
- Funds are available to U.S. Businesses NOW
- This is not a loan. These tax credits do not need to be repaid
‘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,’ said Martin Ellis, housing economist at the Halifax.
‘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,’ he added.
Buying has been cheaper than renting since 2009 with buying becoming increasingly less expensive over the past three years. In contrast, in 2008 average home buying costs at £935 were 30% or £217 higher than the average monthly rent paid of £719.
The substantial improvement in the affordability of buying relative to renting since 2008 is largely due to a 34% decline in home buying costs over the past four years. The majority of this fall occurred in 2009 due to a drop in both house prices and mortgage rates.
The average monthly cost of renting has risen by 14% or £89 over the past three years from £652 in December 2009 to £741 in December 2012.
Home purchase is at its highest level for five years but remains well below peak. The lower costs of buying compared with renting are likely to have contributed to the 6% increase in the number of house sales in 2012. Nonetheless, whilst sales last year were the highest in the past five years, the total of 932,000 was still 42% lower than in 2007 when it was 1,619,000.
Concerns over job security and raising a deposit are key obstacles to buying. According to the latest Halifax housing confidence survey more than half the respondents highlighted concerns about job security (58%) and the challenges in raising a deposit (55%) as the main barriers to buying a home.
This article was republished with permission from Property Wire.