Over £130 a month cheaper to buy than rent
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by Gill Montia
The cost of buying a home in the UK is currently almost a fifth lower than renting, according to research by Halifax, with buying costs having dropped 3% and average rent having increased 5% in the past year alone.
Those purchasing a three-bedroom property typically paid £600 a month in June 2012, £132 less than the average monthly rent of £732 for the same property.
In fact, homebuyers have seen costs fall 43% since 2008 as a result of shrinking house prices and mortgage rates.
The average mortgage rate for a new borrower has has fallen from 5.91% in June 2008 to 3.82% in June 2012, leaving home buying costs accounting for 29% of average disposable income, compared with 35% for renters.
Even so, the number of buyers in the UK housing market has tumbled – there were 535,200 purchases (with a mortgage) in the twelve months to June 2012, a third less than in the same period in 2008.
Raising a deposit and concerns about job security seem to be the main barriers – both first-time buyers and homemovers put down an average deposit of £40,526 in June 2012, equivalent to 25% of the average property price.
On a regional basis, other key findings from Halifax are as follows:
In June 2012, buying a house was more affordable than renting in all 12 UK regions. In contrast, buying was more expensive than renting in all regions in June 2008.
Buying is most affordable compared to renting in London with the typical homebuyer paying 14% a month less than the average renter (£1,108 against £1,284).
The disparity between buying and renting costs is smallest in the East Midlands with average monthly buying costs 2% lower than average monthly rental costs (£497 against £505).
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