Buying is 16% cheaper than renting |  |
Buying a home in the UK is over a £100 a month cheaper than renting, according to research by Halifax. The typical monthly cost of buying a three bedroom house in the UK was £600 in December 2011: £116 (or 16%) lower than the average monthly rent of £716 paid on the same property type1.
This represents a significant turnaround compared with three years ago when the average cost of buying was 29% higher than the average rent paid. The monthly costs associated with buying accounted for 29% of average UK disposable income in 2011, compared to 47% in 20082.
Home buying costs have fallen by more than a quarter (£328) since 2008, driven by a decline in the average monthly mortgage payment of nearly one-third (£242) due to the marked fall in mortgage rates and house prices. The mortgage rate for a new borrower has been reduced to an average of 3.63% in 2011 from 5.75% in 2008, while the average house price has dropped by 11% over the same period3.
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.
Over the past year, buying costs have dropped by 5% whilst the typical cost of renting has risen by 5%, continuing the trends seen in 2010.
