Buying A House 'Cheaper Than Renting'
Home buyers are almost £900 better off a year than those who rent - but an upturn in house prices means the gap has narrowed in recent months, a report has found.
Research by Halifax, which based its calculations on its own database as well as official figures, found that people buying a three-bedroom house face typical costs of £672 a month, which is £73 less than the average £745 a month cost of renting.
Five years ago, renting was considered much more financially attractive than buying, but home buying costs have since fallen by more than a third, meaning that buying has become cheaper than renting.
Falls in house prices following the economic downturn combined with low mortgage rates in the low interest rate environment have all contributed to the about-turn.
Meanwhile, rental costs have been pushed higher by strong demand in the sector, as many renters have struggled to get on to the property ladder.
But a return to activity in the housing market has pushed house prices up, which means that the gap between buying and renting costs has narrowed from a difference of £78 a month one year ago.
Halifax recently reported that prices nationally have risen by 5% over the last year. Other reports have recently put prices in London at around 10% higher than they were a year ago.
People living in London and Northern Ireland have the most to gain from buying rather than renting, the research suggested. The gap in percentage terms is biggest in Northern Ireland, at 11%. Buying in Northern Ireland costs £369 a month on average, while renting costs £415.
In cash terms, Londoners have the most to gain from being on the property ladder, with a saving of almost £100 a month.
Wales and Yorkshire and the Humber were the only areas of the UK where renting was found to be more affordable than buying. In Scotland, buying was found to work out £27 a month cheaper than renting.
Martin Ellis, housing economist at Halifax, said: "A combination of lower mortgage rates and declining house prices has substantially reduced the cost of buying over the past six years.
"Nevertheless, the number of home buyers in the 12 months to June 2013 was nearly half of that in 2008, which will have been constrained by worries over job security."