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

Merry Christmas … plus the property year in review

This is a legacy post from the findaproperty.com blog which is now maintained as an archive within the Zoopla blog. Links have been preserved.

As 2011 draws to a close we’d like to wish you all a merry Christmas and a healthy and happy new year.

Property festive: We wish you a merry Christmas

Here at FindaProperty.com we’re also pausing to reflect on what’s been a very busy year on the property front and to pick out some of the top stories of the year.

First-time buyers

The endangered species of the property market, first-time buyers faced a tough year on the home front. Even though interest rates remained at historic lows and prices held steady or in many cases came down, those looking to take that first tentative step onto the property ladder and buy a home were rarely seen.

The Council of Mortgage Lenders (CML) reported there are now 200,000 FTBs a year compared with around 500,000 before 2008. And it’s a story of affordability. The CML says the average deposit for a first-buyer home is now 20%, which means finding a national average deposit of at least £25,000, or significantly more than that in London and some other cities.

Housing minister Grant Shapps recognised the problems faced by first-time buyers when he launched the goverment’s new housing strategy earlier this year, saying an “entire generation” have been blocked from the housing ladder and pledging to put this group at the centre of Government efforts to get the property market moving again.

Renting

The UK’s move towards being a nation of renters, rather than buyers, was probably the biggest single property story of the year.

FindaProperty.com research found the typical national monthly rent reached £890 in October – the highest average we’ve ever recorded for a home to rent- which accounted for 46 % of average monthly household net earnings. Renting was further thrust into the spotlight by homelessness charity Shelter and their disturbing landmark report into the affordability of the private rental sector.

Latest FindaProperty.com figures for December show rents are down slightly – partly down to a seasonal change, but this adjustment doesn’t change the fact that more of us are expecting to stay in our rented homes for longer. Recent FindaProperty.com research found 26 per cent of home searchers had “no issue” with renting long term.

House prices

House prices generally held steady in 2011. FindaProperty.com’s November asking price data showed the average price of a home at £215,385, 0.5% down on the previous month, but still 0.7% higher than a year ago. London’s status as an international city meant it operated as an independent market and the latest figures showed prices continued to increase there – by 0.7% last month, bringing the average price of a London home to £453,956.

December 15, 2011 at 3:03 PM Leave a comment

X Factor’s Kelly Rowland eyeing a London home?

Could North London be about to get another sprinkle of American star dust?

London calling: Kelly Rowland has said she may move to the UK if she lands another series in the X Factor judge's chair

Hot on the heels of Hollywood starlet Cameron Diaz, who recently snapped up a home in Belsize Park, comes news that X Factor judge Kelly Rowland is planning to move to Blighty if she’s invited to return to the Simon Cowell talent quest juggernaut next year.

The singer, who took her place at the judges’ table alongside Tulisa Contostavlos, Gary Barlow and Louis Walsh, has admitted she would love to return to the show in 2012 and is a fan of celebrity enclave North London.

She told the Daily Mirror: “There is no place like UK X Factor. If Simon wants me back next year then that would be good.

“I’m definitely considering buying a house over here as I love it here.”

However, the former Destiny’s Child singer, who currently calls a Miami beach house home,  admitted she’d need to take her family into consideration before making the final decision to move to the UK.

“My mother would have a problem with me moving because it’s so far away from home so she may have to move with me,” says Rowland, who sold her five-bedroom Texas property back in 2005 before relocating to Miami. “She doesn’t like that long plane ride so I’ve got to make sure I make her happy.”

Rowland still has a bit of time before she needs to start house hunting on this side of the Atlantic. X Factor bosses are yet to confirm whether any of this year’s judges will be returning in 2012 and a decision isn’t expected until April or May next year.

But in the interests of helping Rowland out, we’ve picked out three North London homes within easy commuting distance of the show’s Wembley live venue, in which we think Rowland could be very happy.

She might even meet Ms Diaz at the local Starbucks for a Chai Latte.

The bling factor

Perfect for next year’s Judges House segment, this seven bedroom home in Templewood Ave is set back behind a gated driveway: all the better to keep prying eyes away. There’s also a 100 ft mature garden, a smart reception room (for those tough love chats she needs to deliver as mentor) and a  master bedroom with huge en suite dressing room (somewhere to keep the frocks). This home is just a short trot to West Heath too, so Rowland won’t ever miss her morning jog.

The home is for sale for £15 million through Knight Frank

The glamour factor

Rowland could channel a bit of old school British glamour in this seven bedroom detached home in Frognal Lane, which was home to the actor Dame Peggy Ashcroft for 40 years from 1946. Manor House is Grade II listed and even has its own staff annexe. Also, if Rowland gets homesick for Miami she can just look out the window into a west facing garden and admire her very own water feature: surely that will help her cope with living away from the sea and sun of Miami beach.

The home is for sale for £8.9m through Goldschmidt and Howland.

The village factor

This six-bedroom, six bathroom Victorian terrace would deliver Rowland the much envied celebrity village lifestyle of Belsize Park already enjoyed by the likes of Cameron Diaz, Gwyneth Paltrow and Chris Martin. This period home has a contemporary look inside with a state of the art kitchen, spacious bedrooms and a bijou garden (all the better for a sophisticated woman like Rowland).

The home is for sale for £5.9m through TK International

 

 

December 14, 2011 at 12:57 PM Leave a comment

How to be on property TV: Get a fixer-upper

This is a legacy post from the findaproperty.com blog which is now maintained as an archive within the Zoopla blog. Links have been preserved.

Are you digging out your workman’s boots and hard hat while channelling your inner Sarah Beeny? Then presenter, actor and property renovator Simon O’Brien wants to hear from you.

From Brookside and Fraggle Rock to My Derelict Dream Home, Simon O’Brien will front the new UKTV property TV show

O’Brien will be the front man of the aptly named TV show about finding your new property called My Derelict Dream Home due to air on UKTV in 2012.

As you’d imagine, transforming a wreck into your ultimate house  is likely to take time, which is why the producers need to find you now –  they’ll presumably be following you (and your muddy boots) around for the next year or so to capture all the drama of taking on an unloved property as a renovating challenge.

Plus, you’ll no doubt also get to hang (or at least meet) Simon O’Brien who made his name on Brookside back in the 80s. O’Brien has since featured on Grange Hill, been a radio and TV presenter and was even part of the short-lived, but much loved UK version of Fraggle Rock.

For more details about My Derelict Dream Home contact Joe Forrest at True North Productions on 0113 394 5480 / jforrest@truenorth.tv

December 1, 2011 at 2:06 PM Leave a comment

Seeking the first-time buyer: the property market’s endangered species

This is a legacy post from the findaproperty.com blog which is now maintained as an archive within the Zoopla blog. Links have been preserved.

First-time buyers are fast becoming the endangered species of the property world. Even though interest rates are at historic lows and prices are holding steady or in many cases coming down, those looking to take that first tentative step onto the property ladder can be as hard to find as the little-seen Siberian tiger.

First-time buyers: The Siberian Tiger of the property world

But it’s not necessarily price that’s keeping first-timers away from bricks and mortar. After all, it’s now more affordable to buy a home  than at any time since December 2007, according to the latest FindaProperty.com House Prices and Affordability Index.

The average first-time buyer currently needs to find a deposit of £48,782 to buy their own home, £2,371 less than they needed last month and only the third time in almost four years that the typical first-time buyer deposit has dipped below £50,000.

So what kind of cash are we talking about? The average asking price for a typical first-time buyer home is now £153,537 – 0.3 per cent cheaper than it was in September. It’s the fifth time in as many months that first-time buyer homes have dropped in price: they are now at their lowest point this year.

Even though prices and affordability are coming down, the reality of shelling out for a home still bites for many first-time buyers. London remains the most expensive place for first-timers to flex their home owning muscle – a property in the capital costs 7.8 times the typical first-timers’ salary. In the South East, it costs 4.7 times, in the South West 4.5 times and in Wales 4.4 times. Yorkshire and the Humber, Scotland and the North East all have first-time buyer properties that cost 4 times the average salary, while those in the East of England are paying 3.9 times, in the West Midlands its 3.8 times, in the north west its 3.7 times, while in the East Midlands, property is most affordable at 3.5 times the average buyers’ salary.

All of this makes first-time buyer finance critical. It’s encouraging that mortgage lenders are starting to come to the party with larger loans – so long as strict criteria are met – in the interests of easing the way forward.

Meanwhile, the government’s FirstBuy scheme allows approved buyers to purchase a new build home with a five per cent deposit, while many developers are offering their own version of the scheme where they loan up to 15 per cent of the price, leaving the first-timer to finance 85 per cent.

We can only hope these schemes and improved mortgage offers continue to sustain the first-time buyer and keep the breed in good health and away from extinction.

November 29, 2011 at 11:23 AM Leave a comment

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