Home owners are now getting a better deal than those who shell out rent every month in nearly all regions of the UK.
According to research done by Halifax, buying a home in the UK is over a £100 a month cheaper than renting. The typical monthly cost of buying a three bedroom house was £600 towards the end of 2011, making it £116 lower than the average monthly rent of £716 paid on the same property.
This will be welcome news for December’s mortgage seekers when mortgage approvals reached a 19-month high and grossed some £9bn.
Martin Ellis, housing economist at Halifax, said: “The affordability gains for buyers relative to renters in the last three years have been significant. The average mortgage payment has fallen dramatically over recent years as a result of falling house prices and mortgage rates. At the same time, rents have risen due to strong demand for rented accommodation.”
This is a significant turnaround compared with three years ago when the average cost of buying was 29pc higher than the average rent paid.
Ellis continued: “Nonetheless, despite the improvement in the relative affordability of buying a home, the number of purchasers has continued to fall due to the ongoing challenges in raising a deposit and the considerable uncertainty over the prospects for the UK economy, which have severely constrained housing demand.”
Halifax estimates that there were around 510,000 home purchases with a mortgage in 2011, making it the lowest annual total since 1974 and 6pc lower than in 2010.
Much of this decline can be attributed to the increase in the size of the deposit required, with the size of the average deposit put down more than doubling over the past decade. In addition, higher costs related to moving home such as stamp duty and estate agents fees have also added to the overall cost of home buying.
Despite having higher total costs, buying is currently most affordable relative to renting in London, where the average private renter pays up 10.2pc more per month than the typical homeowner. In fact renting is the dearer option in almost all regions except Wales, where renting remains cheaper.
Source: The Telegraph