New research from the Halifax shows that the cost for first-time buyers of purchasing a property is £670 lower than renting.
The data from one of the UK’s leading banks shows that the average monthly cost relating to the purchase of a 3 bed property in the United Kingdom is £666pcm in June 2015. This amount is 8% lower than the average rent paid on a similar property (£722pcm).
First-time buyer woes
When compared to 6 years ago, the price of purchasing a 3 bedroom property has increased by 25%.
Despite the lure of low interest rates – which have dropped from an average of 4.2% to 2.91% over the last 6 years – many first-time buyers who wish to climb the first runs of the property ladder are unable to afford the high deposit, which is required to obtain a mortgage.
Craig McKinlay, mortgage director, Halifax commented: “Looking at monthly costs, the combination of lower mortgage rates and declining rental value over the past six years has made it cheaper to buy than to rent. While numbers of first-time buyers getting on to the housing ladder in the first six months of both 2014 and 2015 has been over 135,000 – almost double the lows seen in 2009 – the issue of building more new homes in the right places needs to be addressed if we are to see sustainable growth.”
Rising property prices
Although the research shows that the gap between the cost of buying and renting is narrowing, property prices continue to rise in the UK.
Great news for those who own a home or are considering purchasing an investment property however, rising prices has pushed many people out of the property market.
Nationwide’s most recent House Price Index has shown that average UK house prices increased by 0.4% in July.
Robert Gardner, Nationwide’s Chief Economist, said, “After moderating over the past twelve months, there are tentative signs that annual house price growth may be stabilising close to the pace of earnings growth, which has historically been around 4%.
“This would bode well for a sustainable increase in housing market activity, though whether this will be maintained will depend on whether building activity can keep pace with increasing demand.”
The current pace of construction is unable to keep up with demand which has meant that many people who wish to purchase property are left on the rental market.
The resurgence of the buy-to-let market
An undersupply of available properties suitable for first-time buyers, high mortgages deposits and a tightening on lending has created a thriving market for buy-to-let investors.
Opportunities for landlords in the buy-to-let market truly prosperous and has once again emerged as a popular asset for investors.
Record month-on-month rental rates were recorded in July 2015 however, the most notable changes were recorded in the north of England.
For those looking to invest in buy-to-let property may wish to consider an off plan development like Brunswick Street which offers investors 7% NET per annum, assured for 3 years.
This opportunity allows investors to purchase a new city centre apartment in Manchester which will be fully managed.