Cheaper now to buy than rent a home

Rising rent payments combined with lower property prices and mortgage rates now mean that property buyers pay 18 per cent – or £132 – a month less on average than those who rent, according to Halifax.

The lender said that average monthly costs for buyers of a typical three-bedroom house – including mortgage payments and household maintenance and repair costs – were £600 in June, against £732 in rent paid on the same type of property. Rent payments have risen steadily in the past few years, up 5 per cent in the past year alone, while buying costs have fallen 3 per cent.

Four years ago, the average cost of buying and owning a home cost 45 per cent – or £324 – more than the average monthly rent paid.

But despite the improvements in affordability, the number of new buyers in the market has fallen by 33 per cent in the last four years as lenders demand high deposits and property prices far outstrip average earnings in an increasingly uncertain jobs market.

The average loan-to-value now stands at around a quarter of the property price, at £40,526.

A record low Bank Base Rate of 0.5 per cent since the financial crisis struck has seen the average mortgage interest payment fall to 3.82 per cent in June from 5.91 per cent in June 2008.

The typical UK house price has fallen by a tenth.