Buying now cheaper than renting across 90% of Britain
26th September 2011
Falling house prices and increasing rental demand has made it cheaper to buy a property than to rent one in 45 of the 50 largest towns across Britain. The cost of renting is now 13% higher on average than the cost of owning, according to the latest research from property website Zoopla.co.uk.
Zoopla.co.uk, which lists over half a million properties for sale or to rent in Britain, analysed the asking prices and rents for all two-bedroom flats currently on the market, comparing the rental cost to the cost of ownership based on servicing an interest-only mortgage at 5% p.a.
Milton Keynes topped the list of locations where buying beats renting with current rents more than 39% higher than the cost of owning, leaving renters on average £2,544 per year worse off. At the other end of the scale, renting remains more cost-effective in Aberdeen, where it costs 9% more to own compared to rent, leaving owners on average £936 worse off.
In London, where the average asking price for 2-bedroom flats currently stands at £430,608, buying still beats renting by a significant margin. The average monthly rent in the capital today is 28% higher than the cost of ownership, leaving renters paying an extra £5,964 annually compared to owners.
Nicholas Leeming, of Zoopla.co.uk, commented: “With house prices down, low interest rates and sky high demand in the private rental sector, buying has never been a better option for those able to secure a mortgage. And with owners reducing prices further in order to achieve a sale before Christmas, there may well not have been a better time to buy in recent times.”
Full list of the top Zoopla.co.uk 50 rent/buy locations
Top 5 locations where renting rules over buying
|
Rank | Location | Avg. Asking Price* | Avg. Monthly Rent* | Rental Discount** |
|---|---|---|---|---|
| 1 | Aberdeen | £ 212,941 | £809 | -8.8% |
| 2 | Swansea | £167,234 | £669 | -4.0% |
| 3 | Cambridge | £246,551 | £992 | -3.0% |
| 4 | Plymouth | £155,353 | £626 | -3.3% |
| 5 | Oldham | £125,012 | £507 | -2.6% |
Source: Zoopla.co.uk
* based on 2 bedroom flats in August 2011
** % variance between average monthly rent and average monthly cost of 5% p.a. interest-only mortgage
Top 5 locations where buying beats renting
|
Rank | Location | Avg. Asking Price* | Avg. Monthly Rent* | Rental Premium** |
|---|---|---|---|---|
| 1 | Milton Keynes | £131,630 | £760 | 39% |
| 2 | Birmingham | £131,118 | £731 | 34% |
| 3 | Northampton | £105,996 | £586 | 33% |
| 4 | Warrington | £104,996 | £577 | 32% |
| 5 | York | £161,769 | £871 | 29% |
Source: Zoopla.co.uk
* based on 2 bedroom flats on the market in August 2011
** % variance between average monthly rent and average monthly cost of 5% p.a. interest-only mortgage
- Ends -
For further information, please contact PR Team on pr@zoopla.co.uk or +44 (0)20 3873 8770.
Methodology
- Mortgage payments are calculated assuming a conservative mortgage rate of 5% p.a. to provide an effective comparison to renting.
- We use an interest-only mortgage rate in the comparison as the interest on a mortgage is the effective cost of financing living in that home.
- We assume a 100% LTV ratio to do a fair and simple comparison of the cost of financing versus the cost of rent.
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We know what a home is really worth.
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