The last three areas where you’re still better off buying than renting
Renting is now cheaper than owning a home in all but three UK regions for the first time, as higher borrowing costs and a national shortage of homes take their toll.
Five years ago there was just one region – the East of England – where it was cheaper to rent than buy. But now owning a home is less affordable than renting in every region bar South West England, Greater London and Scotland.
The average monthly cost of owning a home is now £1,231, more than double the £578 it cost back in 2013, according to new data from high street lender Halifax.
Over the past decade, first-time buyer mortgages have risen by 113pc but rental costs have risen by a lesser 82pc.
The East of England has led the charge, with renters now £2,325 better off annually compared with owning an equivalent home.
Kim Kinnaird, Halifax’s mortgages director, said elevated borrowing costs and a lack of available homes to buy “is pushing ownership further out of reach for would-be first-time buyers in many parts of the country”.
Despite earnings having doubled since 1997, house prices have increased four-and-a-half times over the same period. Homes are slowly becoming more affordable again – they cost 8.3 times buyers’ incomes last year, down from 8.5 times in 2022, according to the Office for National Statistics.
But house prices still rose by £9,500 on average last year, compared with average earnings increasing by just £1,900 over the same period.
Meanwhile, UK rents have continued to rise – by 6.2pc on existing tenancies in 2023, after rising by 4.2pc in 2022.
Tom Bill, of estate agent Knight Frank, said: “The story of the last two years has been a slowdown in transactions, not prices, which has made renting a cheaper option in some areas – even though the lettings market has suffered from a lack of supply.
“Lenders are also in a much stronger position than during the financial crisis, which means no wave of foreclosures to drive down prices. While the strong labour market is one reason inflation has remained stubbornly high, it has also underpinned buyer demand.
“Given that housing will be one of the issues taking centre stage at the election, it would be surprising if the Government failed to offer any help to first-time buyers.”
The Government was reportedly mulling ‘99pc mortgages’, where buyers could put down as little as a 1pc deposit. But this idea was dropped ahead of the Budget, which included no help for first-time buyers.
First-time buyer households earn £57,000 on average. Across England and Wales, newly built dwellings are less affordable on average than existing properties – around 10 times earnings compared with eight times earnings.
But for those on the National Living Wage of £10.42, the average house – new and old – costs 14 times their income.
