Buying a home is more affordable than renting
First time buyers make up half of new home purchases financed by a mortgage.
Despite the fall in annual savings for first time buyers, from £879 to £651 between 2015-2016, purchasing a property remains a more cost effective option across the UK.
Halifax reported recently that buying costs had risen by 5% over the last year compared to the average rent which rose by 2%.
In December 2016, the estimated monthly cost (including mortgage payments) of buying a three bedroom property in the UK was approximately £7,052, 7% lower than the average monthly rent of a similar property.
First time buyers in London pay on average £1,420 compared to the typical renter paying £1,581 creating an annual saving of £1,927 for property owners. The savings were not as high in other parts of the UK, East Anglia had only a £7 difference in the monthly costs of buying and renting.
The financial gap in favour of buying over renting has fallen by 32% since 2011. During this period the average rent rose by 16% while the cost of buying increased by 23%. With mortgage rates for first time buyers at a record low, the 45% rise in the price of typical property has caused the increase in buying costs.
Halifax’s housing economist, Martin Ellis, has said: “Although the average costs associated with buying costs have grown at a faster rate than average rents over the past few years, owning a home is still the more financially attractive option. However, the gap has narrowed since 2011 because of the rising prices of a typical first-time buyer house”
He further adds that the size of deposit required is often the barrier that first time buyers need to overcome before they can avail of the advantages of owning their own home.
Full article available on Property Reporter: http://www.propertyreporter.co.uk/finance/buying-remains-more-affordable-than-renting-says-halifax.html