According to the property website, the average monthly rent in the UK stands at £1,163, while first-time buyers face average mortgage repayments of £1,285 on a 15% deposit.
Renting a home versus buying has been a longstanding debate in the UK property market, and recent data from Zoopla sheds light on the evolving landscape
This renting a home difference is most striking in London and the South East, where higher mortgage costs outstrip rent rates. While the historic trend favored buying due to low mortgage rates, the current scenario has reversed, even as renting a home continue to surge. Zoopla’s head of insights, Richard Donnell, points out that this shift is more evident in areas with higher property prices. In contrast, regions like northern England and Scotland still lean toward buying as a more cost-effective option. On average, monthly renting a home now stands £122 below a typical mortgage payment.
Mortgage rates have spiked as the Bank of England responds to rising inflation, with 14 rate hikes since December 2021
This has implications for the housing market, impacting both prospective buyers and renting a home. Donnell anticipates that as 2023 progresses, renting a home will keep rising, making buying more economical. Nonetheless, housing affordability remains a pressing concern for those in southern England.
The property market turbulence is evident beyond calculations, with shares in major housebuilders falling on the back of profit forecasts reduction by Crest Nicholson. High interest rates and persistent inflation are driving potential homebuyers away, causing ripples across the industry. Amidst the uncertainties, experts suggest strategies such as utilizing low fixed-rate deals and considering interest-only mortgages to manage mortgage payments. Downscaling also emerges as an option, particularly for older homeowners looking to reduce mortgage burdens.
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