Buying home 16% cheaper than renting - Halifax

Published by Julien Tremblin for 24dash.com in Housing

Buying a three-bedroom property in the UK now costs around £100 a month more than renting, new research by Halifax reveals.

The typical monthly cost of buying a three bedroom house in the UK was £600 in December 2011 or £116 lower than the average monthly rent of £716 paid for the same property. This represents a difference of 16%.

This is a complete turnaround compared with three years ago when the average cost of buying was 29% more expensive than the average rent.

The monthly costs associated with buying accounted for 29% of average UK disposable income in 2011, compared to 47% in 2008.

According to Halifax, this is both due to a drop in house prices as well as cheaper mortgages.

Meanwhile, the average cost of renting has risen by 9% (£62) since 2009. Higher demand for rental property, driven partly by the difficulties for potential buyers entering the housing market, has pushed up rents.  

Martin Ellis, housing economist at Halifax, commented: "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.

“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."