New research conducted by Halifax shows that buying a house is cheaper than renting. The research states that the average cost for a first-time buyer for a two-bedroom flat is around 567 pounds, 110 pounds lower than the typical rent on an equivalent space.
Prices and Mortgages Drop
The cost of purchasing housing property has dropped by 40 percent since 2008 as a result of a sagging housing market and low mortgage rates. The price of renting, however, fell by a fraction of an amount during the recession and in the last year has started rising again.
A first-time borrower on average faces a 3.8% mortgage rate, down almost by half from 5.9% in mid-2008. Coupled with that, the price of a typical first property has fallen by 14%.
Halifax housing economist Suren Thiru calculates a very good climate for prospective first-time homeowners. “The recent decline in the cost of buying a property for first-time buyers compared to renting has been substantial, and reflects the drop in both mortgage rates and the house prices since 2008 as well as a marked increase in the average rent paid over the last year,” Ms. Thiru states.
Exemption from Stamp Duty
The Government has also done its part to stimulate the housing market and interest first-time buyers by increasing the stamp duty threshold. George Osbourne raised the treshold from £125,000 to £250,000. The report from Halifax estimtes that this excempts 95% of first-time buyers from paying stamp duty.
This does not mean that first-time buyers will be able to climb the property ladder at the snap of their fingers, however. “While these affordability gains are welcome, conditions in the housing market for those looking to get onto the property ladder remain challenging,” Suren Thiru also said. These challenges include saving up enough cash for a deposit, which averages £27,127 for first-time buyers.