Renting is now Cheaper than Buying in the UK
According to the latest comparison figures from Zoopla, it's now cheaper for first time buyers to rent than to buy.
On average monthly rent is now £122 cheaper than paying a mortgage for first time buyers.
But there is considerable variation....
The figures above are based on first time buyers buying an average value home (national average is £263K) with a massive 15% deposit!
And it is still possible to buy for cheaper than renting, but you have to go right out to the sticks to buy - wales or the far north, so cold and/ or wet!
It's getting harder to accumulate wealth...
So I guess this means it is now harder than ever for the young to accumulate wealth, due primarily to the cost of borrowing going up in the form of higher interest rates, now over 6.5% for mortgages.
This isn't even that high, historically, still manageable I guess, but an almost £40K deposit is astronomical and we're looking at a couple saving for most of their 20s and into their 30s to accumulate such a sum, and then they have to pay relatively more than the place they had presumably been renting before buying.
And now add on the fact that it's economically rational to rent in the short term.
But taken longer term that is, of course, a fallacy, because if you rent ALL of that money is going to someone else, at least with a mortgage some of it is going towards your own wealth accumulation.
This is just another example of how much more difficult it is for younger people... higher borrowing costs simply means an even longer struggle to get on that property ladder.
Of course in the medium to long term you'd expect house prices to come down as with current prices buying is simply out reach of many first time buyers, and some who could buy may well see other investments as more lucrative than buying a house!
So I don't see this situation lasting forever, the market will balance things out eventually.
Probably in the form of rents going up more, I don't see the cost of borrowing coming down that fast!
Darn! When I saw the title, I was hoping that the renting prices would go down in the UK and that we in Spain could expect something similar...
While it's just a "less worse" thing than the other one as probably both went up... lol...
That's a good phrase for out times.... 'less worse'!
Im preparing myself to buy in the next 4 years, hope by then things stay the same or better, but yeah for an average salary down here is close to impossible buying a house without feeling "throw the noose around the neck"
Hopefully property prices will go down for you, I certainly can't see them going up that much, there's no money for that to happen!
I wonder if renting includes social housing rents which are (generally) lower than private rentals. Locally, the experience has been that rents are increasing (or landlords are selling) as the owner is also facing higher mortgage costs. It irks me as well that the more money you want to borrow for a mortgage (ie you have the income to service it) the cheaper it is!
I thought house prices were starting to tumble?
The other thing I dislike about renting is that it is so insecure. No fault evictions mean you can lose your home with two months notice.
The data was from Zoopla so it's probably just private rentals.
I'm sure this is temporary as it'll take maybe a year or so for lower house prices to lower mortgage costs!
It's the same as solar panels - only the rich benefit!
Rental places are in high demand.
My neighbour has six viewings on the first day and they all wanted to move in straight away.
Not sure about cheap because some places you have to queue and be the highest bidder to get a place and often they're sh... holes..
Well you're right in that it does vary from place to place! Renting isn't a preferred option I agree!
If I got a job back in the SE I'd seriously consider keeping my house here and just living in a van during the working days, to avoid renting and then renting!
My brother just sold for a loss so he would not lose more when the prices start dropping further. The agent with rentals told him they have a cut off with 25 interested parties and the rental price is often not the final rental price as people are bidding the rental up. He was looking at 1 place that rose by over 150 pounds before he even had viewed.
Oh my days: what's he doing selling and then renting for a year or so and then buying back?!?
Yes something like that as he couldn't keep the house he bought due to my mother being ill and she needed to have somewhere more convenient fitting her needs as it will be a mobility issue. Bummer but family comes first.
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