It is the dream of many people in ‘Generation Rent’ to get out of the trap of renting and move into their own home. According to data from Halifax, people paying for a home they own are hundreds of pounds better off per year than their renting counterparts.
The data indicates that buying is much more economically viable for people than renting, but unfortunately, getting on the property ladder is not easy when there are no properties to climb onto.
People with a mortgage on a three bedroom house will be seeing a monthly cost, on average, of £666 according to Halifax.
Renting a three bedroom house, on the other hand, will cost an average £722.
Overall, this means that the first time buyer will be better off, per year, by £670, and per month by £52.
This is a shocking amount, considering that the people renting will never see that cash again, whereas the mortgage borrowers are at least putting their money into an asset (the house) which they can then sell off again at some point.
Mortgage rates have been falling, while property prices are still high. Deposits are one of the biggest obstacles to becoming a first time buyer, but it would seem that once the obstacle has been cleared, ownership becomes more economically viable.
However, this may not be the case for long. The £670 that homeowners are better off by is the latest value in a shrinking trend. Last year, the same figure stood at £1,018, so the gap would seem to be narrowing.
This is good, but obviously still not great enough for people stuck renting their homes. The Help to Buy schemes do target these people and try to help them overcome the deposit boundary, but it hasn’t done much, if anything, to bring more new build homes to the market, which would help to rebalance it.