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Buying now cheaper than renting across 90% of Britain

26th September 2011

Falling house prices and increasing rental demand has made it cheaper to buy a property than to rent one in 45 of the 50 largest towns across Britain. The cost of renting is now 13% higher on average than the cost of owning, according to the latest research from property website Zoopla.co.uk.

Zoopla.co.uk, which lists over half a million properties for sale or to rent in Britain, analysed the asking prices and rents for all two-bedroom flats currently on the market, comparing the rental cost to the cost of ownership based on servicing an interest-only mortgage at 5% p.a.

Milton Keynes topped the list of locations where buying beats renting with current rents more than 39% higher than the cost of owning, leaving renters on average £2,544 per year worse off. At the other end of the scale, renting remains more cost-effective in Aberdeen, where it costs 9% more to own compared to rent, leaving owners on average £936 worse off.

In London, where the average asking price for 2-bedroom flats currently stands at £430,608, buying still beats renting by a significant margin. The average monthly rent in the capital today is 28% higher than the cost of ownership, leaving renters paying an extra £5,964 annually compared to owners.

Nicholas Leeming, of Zoopla.co.uk, commented: “With house prices down, low interest rates and sky high demand in the private rental sector, buying has never been a better option for those able to secure a mortgage. And with owners reducing prices further in order to achieve a sale before Christmas, there may well not have been a better time to buy in recent times.”

Full list of the top Zoopla.co.uk 50 rent/buy locations

Top 5 locations where renting rules over buying

Rank

Location Avg. Asking Price* Avg. Monthly Rent* Rental Discount**
1 Aberdeen £ 212,941 £809 -8.8%
2 Swansea £167,234 £669 -4.0%
3 Cambridge £246,551 £992 -3.0%
4 Plymouth £155,353 £626 -3.3%
5 Oldham £125,012 £507 -2.6%

Source: Zoopla.co.uk

* based on 2 bedroom flats in August 2011

** % variance between average monthly rent and average monthly cost of 5% p.a. interest-only mortgage

Top 5 locations where buying beats renting

Rank

Location Avg. Asking Price* Avg. Monthly Rent* Rental Premium**
1 Milton Keynes £131,630 £760 39%
2 Birmingham £131,118 £731 34%
3 Northampton £105,996 £586 33%
4 Warrington £104,996 £577 32%
5 York £161,769 £871 29%

Source: Zoopla.co.uk

* based on 2 bedroom flats on the market in August 2011

** % variance between average monthly rent and average monthly cost of 5% p.a. interest-only mortgage

- Ends -

For further information, please contact PR Team on pr@zoopla.co.uk or +44 (0)20 3873 8770.

Methodology

  • Mortgage payments are calculated assuming a conservative mortgage rate of 5% p.a. to provide an effective comparison to renting.
  • We use an interest-only mortgage rate in the comparison as the interest on a mortgage is the effective cost of financing living in that home.
  • We assume a 100% LTV ratio to do a fair and simple comparison of the cost of financing versus the cost of rent.

About Zoopla

Hello. We're Zoopla. A property website and app.

We know you're not just looking for a place to live. You're looking for a home.

Yeah, we've got over a million properties for you to browse.

Tools that let you filter them in all kinds of clever ways.

And reliable house price estimates, so you can be sure you aren't paying over the odds.

But we know you're looking for more than that.

Because that first flat won't just be a 'great investment opportunity'.

It'll be the feeling of starting out on your own.

That extra bedroom won't just mean another £20K on the re-sale price, it'll mean having your sister over to stay.

And that bungalow won't just be a way to release some equity, it will be a chance to spend more time with the grandkids.

We know that searching for a home is about more than just checking its price, location and features (important as all those things are).

What really matters is how it makes you feel.

We know what a home is really worth.

So let us help you find yours.

Zoopla is part of Zoopla Limited which was founded in 2007.

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Registered in England and Wales with Company No. 09005884
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