Posts filed under ‘Rent Buy Index’

Buying still beats renting across 84% of Britain

Renting is now 16% more expensive on average than owning across Britain

Despite a recent increase in first-time buyer activity, demand remains strong and is keeping rental levels at historic highs. This, along with historically low borrowing costs, makes it as good a time to buy property as it ever has been. However many buyers are still unable to take advantage of these conditions because of their struggle to secure a mortgage.

Our latest Rent v Buy research shows that the cost of servicing a mortgage is now cheaper than renting in 42 of the top 50 (84%) towns and cities in Britain. This figure represents a slight drop from three months earlier when was cheaper to buy than rent in 47 of the top 50 towns.

Despite the fall over the last quarter, buying remains cheaper than renting a property today across the vast majority of the country and it is cheaper to buy now than rent in more locations than at the same time last year. The shortage of mortgages and difficulties faced by first-time buyers in securing a deposit has increased demand for rental property and led to renting in Britain now costing 16% more on average than buying, up from 11% this time last year.

The average monthly rent in Britain has come down slightly by £9 on average over the past 3 months to £1,470 per month in February 2012. Meanwhile asking prices have dropped by £6,500 on average over the same period to £255,037.

Swansea, Oldham and Cambridge top the list of places where it currently still pays to rent rather than buy with rental discounts ranging from 4.6% to 8.4%. In contrast, it make most sense to buy in Milton Keynes where renting is 38.8% more expensive than servicing a mortgage, leaving renters £2,580 per year worse off on average. York and Preston also offer buyers better deals to buy than rent with renters paying around a third more on average in both places.

In London, despite the high cost of buying, it still beats renting with the average asking price for a 2-bedroom flat in the capital currently at £452,387, while the average rent for an equivalent property is £2,422 per month, making renting 29.6% more expensive than owning on average.

Locations where renting rules over buying

Rank Location Avg. Monthly Rent* Avg. Asking Price* Rental Discount**
1 Swansea £676 £177,100 -8.4%
2 Oldham £497 £126,447 -5.6%
3 Cambridge £1,033 £260,029 -4.6%
4 Bournemouth £757 £189,280 -4.0%
5 Liverpool £598 £145,581 -1.4%
6 Aberdeen £846 £205,618 -1.2%
7 Huddersfield £495 £120,049 -0.9%
8 Plymouth £601 £144,862 -0.4%

Source: Zoopla.co.uk

* Based on 2 bedroom flats on the market for sale/rent in February 2012

** % variance between average monthly rent and average monthly cost of 5% p.a. interest-only mortgage

Top 10 locations where buying beats renting

Rank Location Avg. Monthly Rent* Avg. Asking Price* Rental Discount**
1 Milton Keynes £770 £133,141 38.8%
2 York £856 £154,176 33.2%
3 Preston £550 £99,838 32.3%
4 Northampton £589 £107,314 31.7%
5 Birmingham £701 £128,170 31.3%
6 Walsall £497 £91,098 30.9%
7 London £2,442 £452,387 29.6%
8 Bradford £482 £89,923 28.5%
9 Swindon £587 £109,912 28.2%
10 Warrington £571 £106,987 28.0%

Source: Zoopla.co.uk

* Based on 2 bedroom flats on the market for sale/rent in February 2012

** % variance between average monthly rent and average monthly cost of 5% p.a. interest-only mortgage

Methodology

  • To compare the cost of buying versus renting, Zoopla analysed the current asking prices and rents of over 84,000 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.
  • Mortgage payments are calculated assuming a 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.

As always, please feel free to share and use this research, all we ask is that you credit the source as Zoopla.co.uk and link to Zoopla.co.uk. Thank you.

Follow Zoopla on Twitter
Like Zoopla on Facebook

March 19, 2012 at 9:46 AM 3 comments

Buying beats renting in 94% of UK towns

Renting now 15% more expensive than owning on average across Britain

Our latest research shows buying a property is more cost-effective than ever compared to renting, however many potential buyers aren’t able to take advantage because they can’t access mortgage finance. The shortage of financing, especially to first time buyers, has pushed demand for rental property through the roof. But for those lucky enough to be in a position to get a mortgage, there may never have been a better time to buy.

Our latest Rent v Buy Index shows:

  • Buying property more attractive than it has ever been compared to renting
  • Renting now 15% more expensive than owning on average across Britain
  • Swansea, Plymouth and Bournemouth only places where renting rules
  • Renters in London pay £6,888 p.a more on average than homeowners

High rental demand, due to the difficulties would-be buyers face in getting financing, coupled with low mortgage rates has made buying property in Britain more attractive today than it has ever been in comparison to renting. Buying now beats renting in 47 of the 50 largest towns across the country, according to our latest analysis.

The figures also show a significant increase on this time last year, when it was better to buy than rent in only 40 out of the same 50 towns. The continued mortgage drought and the rising demand for rental properties has led to renting now costing 15% more on average than buying, up from only 10% more this time last year.

Swansea, Plymouth and Bournemouth are the only 3 locations on the list of 50 towns where it remains cheaper to rent than buy today. In contrast, Milton Keynes comes top of the list of locations where buying beats renting and where renting is 36% more expensive than owning, leaving renters £2,436 per year worse off on average. Warrington and Walsall also feature highly on the list of locations where it is cheaper to buy than rent, at 33% and 32% rental premiums respectively.

In London, where the average asking price for 2-bedroom flats currently stands at £442,036, buying also trumps renting by a big margin. With average monthly rents in the capital at £2,416, renting is 31% more expensive than the cost of ownership, leaving renters paying an extra £6,888 annually on average compared to owners.

Full list of the top Zoopla.co.uk 50 rent/buy locations

To compare the cost of buying versus renting, Zoopla analysed the current asking prices and rents of over 78,000 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.

Locations where renting rules over buying

Rank Location Avg. Monthly Rent* Avg. Asking Price* Rental Discount**

1

Swansea

£653

£172,871

-9.3%

2

Plymouth

£618

£158,693

-6.6%

3

Bournemouth

£756

£192,456

-5.7%

  • Source: Zoopla.co.uk
  • * Based on 2 bedroom flats on the market for sale/rent in November 2011
  • ** % variance between monthly rent and interest-only mortgage payment at 5% pa

Top 10 locations where buying beats renting

Rank Location Avg. Monthly Rent* Avg. Asking Price* Rental Discount**

1

Milton Keynes

£756

£133,217

36%

2

Warrington

£601

£108,604

33%

3

Walsall

£507

£92,031

32%

4

Coventry

£582

£105,850

32%

5

Northampton

£587

£106,925

32%

6

York

£866

£158,127

31%

7

London

£2,416

£442,036

31%

8

Wolverhampton

£505

£92,590

31%

9

Swindon

£597

£110,574

30%

10

Birmingham

£706

£130,937

29%

  • Source: Zoopla.co.uk
  • * Based on 2 bedroom flats on the market for sale/rent in November 2011
  • ** % variance between monthly rent and interest-only mortgage payment at 5% pa

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.

December 15, 2011 at 3:47 PM 5 comments


Zoopla Mobile & Tablet Apps

Grab the App

Zoopla.co.uk

Search over 1 million properties for sale or to rent on our site from more than 18,000 agents and developers, including all of the UK's leading names.

Posts delivered hot and fresh to your inbox. Signup for free to subscribe, (No spam... ever) and join over 16,000 others.

Enter your email address below:

Recent Posts

Follow Zoopla

Archives

About the Zoopla blog

The Zoopla property blog is maintained and edited by the Web Content Editor @ Zoopla Property Group Ltd Myra Butterworth.

Follow

Get every new post delivered to your Inbox.

Join 544 other followers

%d bloggers like this: