Britain’s property market is so hot that getting on the property ladder is virtually impossible for large swathes of the population.
House costs exceed salaries by more than ever before, and in London, to buy a bog standard home, people need to earn £140,000 a year, more than four times the £30,338 average salary in the capital.
But despite seeming out of reach for lots of people, it’s actually the best way to go about saving money on accomodation, according to new research from Santander.
Rental prices now outstrip the cost of mortgage payments in every region of the UK, the research shows, meaning that once you get yourself on the property ladder, you’ll be saving money hand over fist.
Overall, the average cost of renting is nearly £995 ($1475) per month, while mortgage payments cost an average of £805 ($1190) for first time buyers, meaning that buying a house could actually save people as much as £2000 ($2960) a year.
Amazingly despite the horror stories of people paying £1000 ($1481) per month to rent a mouldly cupboard in Zone 3, its not London where rental prices exceed mortgage payments the most, although it does come a close second, with rentals costing £179 ($265) more a month than mortgages.
The south west of England has the highest premium for renters — as much as £192 ($284) per month. The average rented property costs £902 ($1335), while mortgages payments hit just £710 ($1050).
Compared to paying a mortgage, the cheapest place to rent in the UK is in the east, encompassing much of the area around London. In this part of the world, the cost of renting is just £2 ($3) more than buying.
Miguel Sard, Santander UK’s managing director of mortgages said: “People assume that buying a property will put them under greater financial pressure, but often the reverse is true.
“With annual savings [of buying versus renting] averaging well over £2,000, this can really mount up over time and once the mortgage is repaid you have a valuable asset to show for it.”
Obviously, the difficult part in all of this is raising the capital to get a mortgage, and finding a deposit, but once those hurdles are overcome, it’s clear that having your own home is cheaper than a mortgage.
Santander’s research also showed that first time buyers spend an average of £212,610 ($314,000) on their homes, around £75,000 ($111,000) lower than the national average house price provided by the ONS.