Buying a home cheaper than renting
Published 16/02/2013 | 02:31
The cost of buying a home has become £1,440 a year cheaper than renting, research from Halifax has found.
The gap has widened in recent years amid house price falls and record low interest rates which have made borrowing cheaper for those who can get access to a mortgage.
Meanwhile, increased demand in the rental sector from those struggling to raise a deposit or meet lenders' borrowing criteria has pushed up rental costs.
Halifax said the average monthly costs associated with buying a three-bedroomed house stood at £621 in December, which is £120 cheaper than the typical monthly rent of £741 on a similar property.
Average buying costs include mortgage payments, income lost by funding a deposit rather than having savings and spending on repairs, using figures from Halifax's own database as well as official sources.
The latest figures are an about-turn from December 2008, when buying a home was £217 a month more expensive than renting.
Home buying costs have declined by one third (34%) over the past four years, while average monthly rents have been pushed up by 14%, the study found.
Buying is most affordable compared with renting in London, where the monthly difference is £193, while in Yorkshire and the Humber buying is just £1 a month cheaper than renting, Halifax found.
Martin Ellis, housing economist at Halifax, said that while the "financial attractiveness" of buying a home has improved in recent years, the tough economy is still holding would-be home buyers back.
He said: "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 home buyers are on the first rung of the ladder, their monthly costs are notably lower."