Rising house prices and recent interest rate hikes means that it is now only £5,811 cheaper to buy than rent, over a 25 year period, according to Abbey. The staggering results are different across areas of the UK but Abbey say the difference between buying and renting last year was £24,000. So in the last year the combined affect of interest rate rises and house price increases have slashed the gap by 76 per cent!
Bad news for would-be first time buyers, more proof that the cost of getting on the property ladder is getting more expensive by the month. If you postpone buying a property for 12 months you could be in for a shock!
The annual UK Rent Versus Buy Index from Abbey Mortgages say it is actually cheaper to buy than rent in the UK, but as demonstrated above only just and the gap is closing fast. The research, which surveyed the average cost to a buyer who has a mortgage for 25 years compared to the average cost for a person renting across the UK, found that the average cost of renting is £443,736 while to buy a home over the same period is £437,925 – a saving of £5,811 or 1.3 per cent. Last year the results showed that homeowners were better off than renters by an average of six per cent.
So where’s best to buy? West Scotland is better value to buy rather than rent. This year East Scotland topped the table with a saving for homeowners of 21 per cent. The North, South East and East Anglia too, all have a saving for homeowners of 10 per cent or more. West Scotland and the South West scrape into this category with 7 and 6 per cent respectively.
Where’s best to rent?
Northern Ireland is the best place to rent with people who buy being 46 per cent worse off than people who rent! This is mainly due to the 50 per cent increase in house prices in the last year alone.
Don’t forget after 25 years of renting you should still have another 25 years of living to do, so another 25 years of renting!
If you opt for a repayment mortgage over 25 years, at least you’ll own the property after 25 years, something to bear in mind!...