The Halifax Buying vs. Renting Review shows that the typical monthly cost of buying a three bedroom house was £600 in December, 16% cheaper than the average monthly rent of £716 on the same property type.
The review tracks changes in the cost of buying and renting property, taking into account mortgage payments, income lost by funding a deposit rather than saving, spending on household maintenance and repair and insurance costs into buying costs.
It is based on data from Halifax’s own database, as well as figures from Birmingham Midshires, the Bank of England and the Office for National Statistics.
The research shows that home buying costs have fallen by more than a quarter, or £328, since 2008, driven by a fall in the average monthly mortgage rate from 5.75% to 3.63%, as well as a drop in house prices.
In 2008, the average cost of buying was 29% higher than the cost of renting.
And between 2010 and 2011, buying costs have fallen by 5% while renting costs have risen by 5%.
Buying a home was more cost-effective than renting in 11 out of the 12 UK regions in December 2011, with Wales being the only region where renting remains cheaper than buying.
Martin Ellis, housing economist at Halifax, says: “The affordability gains for buyers relative to renters in the last three years have been significant. The average mortgage payment has fallen dramatically over recent years as a result of falling house prices and mortgage rates.
“At the same time, rents have risen due to strong demand for rented accommodation.”
But he adds that despite this, the number of purchasers has continued to fall due to ongoing challenges in raising a deposit and uncertainty over the economy and housing market.