By Daniel Hunter
The cost of buying a home in the UK is 16% lower than renting, according to research by Halifax.
The average monthly costs associated with buying a three bedroom house stood at £621 in December 2012; £120 (or 16%) lower than the typical monthly rent of £741 paid on the same property type. Over the course of a year this is equivalent to a saving of £1,440.
The gap between the costs of buying and renting has widened by £21 per month over the past year. At the end of 2011, the monthly costs associated with home buying was £99 (14%) lower than renting. Over the past year, buying costs have risen by 1%, while the cost of renting has increased by 4%.
Buying a house is more affordable than renting in all 12 UK regions. Buying is most affordable compared to renting in London with the typical homebuyer paying 15% (£193) a month less than the average renter (£1,101 against £1,294). In Yorkshire and the Humber there is virtually no difference, with average monthly buying costs just £1 lower than average monthly rental costs (£482 against £483).
"The sharp decline in home buying costs over the past few years, combined with a significant increase in rents, has greatly improved the financial attractiveness of buying a home," Martin Ellis, housing economist at Halifax, commented.
"This shift has contributed to the increase in the numbers of house purchases, which reached a five year high in 2012.
“Despite this pick-up, home buying levels remains well below the levels at the height of the market. Today, 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 homebuyers are on the first rung of the ladder, their monthly costs are notably lower.”
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