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Buying now costs less than renting in nearly half of UK cities

  • Mortgage payments are cheaper than rents in 48% of Britain’s big cities
  • In Glasgow, Coventry and Birmingham is cheaper to buy than to rent
  • But in Cambridge, London and Brighton renters are better off than buyers

Camilla Canocchi for Thisismoney.co.uk

Buying a home is now cheaper than renting in nearly half of UK cities, despite rising house prices, new figures suggest. 

Savings can be upwards of £600 a month in some areas when rental costs are compared with an average monthly mortgage. 

Buying is now cheaper than renting in 48 per cent of cities, up from 36 per cent in October, according to property website Zoopla. 

The North-South house price divide means buying a home in cities such as Glasgow and Birmingham comes out cheaper than renting, while the opposite is true in many cities in the South, the figures suggest.

The findings comes as a recent study from Nationwide found the average house price in the South is now worth more than double one in the North, with average UK house price inflation at nearly 6 per cent in March. 

Cheaper to buy: Glasgow is the top city for home buyers as they are £128 a month better off than renters

Glasgow is the top city for home buyers as they are £128 a month better off than renters, with the average mortgage payment at £450, compared to an average monthly rent of £578 – a 25 per cent difference.

This is because the average asking price for a two bedroom home in the largest Scottish city is just below £90,000.

However, in Cambridge and London, where prices for the same kind of property are on average£374,500 and £675,000 respectively, mortgage costs are almost double the cost of rent on equivalent properties.

This doesn’t mean that rents in these cities are cheap – quite the opposite, as renting a two-bed costs on average £1,104 a month in Cambridge and more than £2,000 a month in the capital.

However prices are still cheaper than average monthly mortgage payments of £1,873 and £3,377 respectively.

TOP 10 CITIES WHERE BUYING IS CHEAPER THAN RENTING (monthly rent vs mortgage payment)

1. Glasgow – £578 vs £450  (25%)

2. Coventry – £726 vs £595 (20%)

3. Birmingham – £752 vs £625 (18%)

4. Bradford – £496 vs £412 (18%)

5. Newcastle-upon-Tyne – £591 vs £500 (17%)

6. Bolton – £478 vs £415 (14%)

7. Peterborough – £661 vs £575 (14%)

8. Nottingham – £652 vs £574 (13%)

9. Barnsley – £452 vs £400 (12%)

10. Stoke-on-Trent – £526 vs £470 (11%)

TOP 10 CITIES WHERE RENTING IS CHEAPER THAN BUYING (monthly rent vs mortgage payment)

1. Cambridge – £1,104 vs £1,873 (52%)

2. London – £2,109 vs £3,377 (46%)

3. Brighton – £1,200 vs £1,601 (29%)

4. Swansea – £600 vs £800 (29%)

5. Wigan – £437 vs £550 (23%)

6. Aberdeen – £752 vs £930 (21%)

7. Reading – £1,104 vs £1,351 (20%)

8. Bournemouth – £826 vs £1,000 (19%)

9. Rotherham – £426 vs £500 (16%)

10. Southampton – £778 vs £900 (15%)

The figures are based on asking prices and rents for two bedroom properties currently on the market in Britain’s biggest 50 cities and on 25-year mortgages with 10 per cent deposit and a fixed interest rate of 4.5 per cent.

The numbers do not take into account other costs associated with buying or renting, such as maintenance costs for homeowners that would not be covered by tenants. 

Coventry, Birmingham and Bradford are also among the top cities where buying is most cost-effective, as renting is about 20 per cent more expensive than paying off a mortgage.

Conversely, the average cost of monthly mortgage repayments in Brighton and Swansea, at £1,600 and £800 respectively, are almost 30 per cent more expensive than the average rent at £1,200 and £600.

Cheaper to rent: The average rent in Cambridge is £1,104 – against monthly mortgage repayment of £1,873

Lawrence Hall of Zoopla said: ‘Once you get past the initial fees that come with a house purchase, such as a deposit and stamp duty, our figures show that it can pay to try and get on the property ladder.’

‘Particularly if you’re in Scotland, Northern England or in the West Midlands, taking the first step onto the ladder and sacrificing the flexibility of renting can be a much cheaper alternative.’

Pro-homebuyers: Those living in Birmingham can save about £128 if they buy compared to renting

Pro-homebuyers: Those living in Birmingham can save about £128 if they buy compared to renting

But he added: ‘In London and the South, it’s largely a different story. Despite the very high rents of London, and relatively high rents of Cambridge, Brighton and other southern cities, getting onto the property ladder is still proving tough.

‘The housing supply pressure in London in particular has become so intense that getting onto the property ladder can be significantly more costly per month than renting.’

Nationwide last week said UK house prices rose by 5.7 per cent in March, or by £10,797, in just one year, the fastest pace of growth for 13 months.

It means the value of the average UK home has topped £200,000 for the first time, having risen from £196,930 just one month before.

In Coventry, renting is about 20 per cent more expensive than buying

In Coventry, renting is about 20 per cent more expensive than buying

However the picture is very different across the country. The gap between average prices now stands at nearly £163,000 with the average home in the South – including the South West, South East, London and East Anglia – costing £313,670 while one in the North – which for the purposes of the study includes the Midlands as well as Yorkshire and Humberside, the North West and the North East – is £150,917.

A separate report out today has found that there was a big rise in new rental properties being listed on the market in the last week, in the run up to the rise in stamp duty.

Property crowdfunding platform Property Partner said a fifth more properties (just over 20 per cent) were advertised in the week to 4 April compared to the previous one.

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