Andrew Shaw of London's flat-fee estate agent OliverFinn has been asked the same question many times by would-be home owners recently. People want to know if now is a good time to buy a property or if they are better off renting.
CML (Council of Mortgage Lenders) research published this week looks at the comparative costs of owning and renting a property. There are two crucial factors that make a big difference to how you perceive the relative costs.
If you ignore the need for a hefty deposit, buying is cheaper than renting a similar property across all borrowing types, and across all regions of the UK. But that is not surprising when you take account of the fact that a typical deposit might be 25%, so the borrowing costs relate to only 75% of the property's value, whereas a tenant will be paying rent covering 100% of the property.
Buying versus renting
If you factor in the deposit (and the cost of a notional 100% mortgage payment), then the picture changes. Buying becomes more expensive than renting for two thirds of first-time buyers on a capital-and-interest repayment basis. But buying is still cheaper than renting for around four-fifths of first-time buyers on an interest-only basis.
Its six of one and half a dozen of the other says Shaw, who is based at OliverFinn's
Notting Hill branch: "If you set aside the financial considerations, you're left with the issue of confidence. It comes down to how confident people are in their jobs and in the property market.
"If you feel you have job security and believe that we're at the bottom of the market, now is a good time to take the plunge."
Average repayment mortgage monthly payments in the UK are £176 more than renting a comparable property. Interestingly, however, monthly rents are £176 per month - exactly the same amount - more expensive than average interest-only payments.
This statistical coincidence adds equilibrium to the calculation and demonstrates there is no clear winner in the monthly affordability stakes.
CML (Council of Mortgage Lenders) research published this week looks at the comparative costs of owning and renting a property. There are two crucial factors that make a big difference to how you perceive the relative costs.
If you ignore the need for a hefty deposit, buying is cheaper than renting a similar property across all borrowing types, and across all regions of the UK. But that is not surprising when you take account of the fact that a typical deposit might be 25%, so the borrowing costs relate to only 75% of the property's value, whereas a tenant will be paying rent covering 100% of the property.
Buying versus renting
If you factor in the deposit (and the cost of a notional 100% mortgage payment), then the picture changes. Buying becomes more expensive than renting for two thirds of first-time buyers on a capital-and-interest repayment basis. But buying is still cheaper than renting for around four-fifths of first-time buyers on an interest-only basis.
Its six of one and half a dozen of the other says Shaw, who is based at OliverFinn's Notting Hill branch: "If you set aside the financial considerations, you're left with the issue of confidence. It comes down to how confident people are in their jobs and in the property market.
"If you feel you have job security and believe that we're at the bottom of the market, now is a good time to take the plunge."
Average repayment mortgage monthly payments in the UK are £176 more than renting a comparable property. Interestingly, however, monthly rents are £176 per month - exactly the same amount - more expensive than average interest-only payments.
This statistical coincidence adds equilibrium to the calculation and demonstrates there is no clear winner in the monthly affordability stakes.
