If you’ve been thinking about buying, you might be tossing up whether it’s cheaper to rent or to buy – let’s take a closer look.
There isn’t a straightforward answer to the question of what’s cheaper. This is especially because the property market is continuously changing, and it also depends on the regions and the type of property you’re interested in.
What is the UK's average property price?
Using the HM Land Registry latest UK house price data, average house prices in the UK were £290,000 in July 2023, which is £2,000 higher than the previous year. Scotland’s average house price in July 2023 was £192,000 (0.1% higher than last year). In England, average house prices were £309,000(a yearly increase of 0.6%), and in Wales £216,000 (a yearly house price change of -0.1%).*
The current asking prices, according to Rightmove, followed their usual seasonal trend and increased in the first week of September, reaching £366,281 (+0.4%) for the whole of the UK. Scotland experienced a 2.6% year-on-year increase in asking price, reaching £190,176. In terms of monthly change, it had a slight dip in asking prices (-0.1%), an improvement from August’s month-on-month change of -0.9%, as well as a modest decrease in actual house prices of -0.8% (average house price of £201,594), according to the most recent Halifax House Price index.^
As always, in terms of time to sell, Scotland takes the lead, with an average of 32 days, versus Wales where it takes double the time (64 days).^
What’s happening in the rental market?
Average rents in the UK have increased by 1.19% over the last month and by 10.09% year-on-year, meaning that renters are currently paying an average of £1,276 per calendar month (pcm). Scotland’s annual growth was above average with 13.3%, but experienced a -0.8% decrease month-on-month (the first since January 2023) reaching £977 pcm. Rent in Wales increased by 1.2% compared to last month, and 7.3% year-on-year, reaching £8452 pcm.
This means that in Scotland, renters are, on average, spending 25.9% of their income on rent, which is 1.8% more than the same time last year.
Is it cheaper to buy or to rent?
After taking all of the above into account, as well as looking at the current market, one can’t forget about what’s happening with interest rates, as this will influence the mortgage market. If you want to know more about what’s currently happening in the world of mortgages, read about how the interest rates could affect you here.
Zoopla published a great graph that depicts where in the UK it’s cheaper to buy and where it’s cheaper to rent, based on a 5.6% mortgage rate and the region in which you live (see Figure 1).
Figure 1: Buying with a 5.6% mortgage rate versus renting according to Zoopla
Picking out a few regions, you can see that in London the difference is the largest, where buying is, on average, £403 more expensive than renting. However, in Wales, there is only a £15 difference, where buying is slightly cheaper than renting. In Scotland, buying is, on average, £128 cheaper than the average rent, placing Scotland nicely in between London and Wales. Other regions in which it’s currently cheaper to buy than to rent are:
Table 1: Where buying is cheaper than renting (Source: Zoopla Research)
|
Region
|
Average rent
|
Mortgage repayment based on 5.6% mortgage rate
|
Difference
|
|
Scotland
|
£748
|
£620
|
£128 (21%)
|
|
North East
|
£649
|
£531
|
£118 (22%)
|
|
North West
|
£795
|
£736
|
£59 (8%)
|
|
Northern Ireland
|
£774
|
£700
|
£44 (11%)
|
|
Yorkshire & the Humber
|
£758
|
£731
|
£27 (4%)
|
|
Wales
|
£814
|
£799
|
£15 (2%)
|
Table 2: Where renting is cheaper than buying (Source: Zoopla Research)
|
Region
|
Average rent
|
Mortgage repayment based on 5.6% mortgage rate
|
Difference
|
|
West Midlands
|
£852
|
£890
|
£38 (4%)
|
|
East Midlands
|
£816
|
£868
|
£52 (6%)
|
|
South West
|
£1,016
|
£1,184
|
£168 (14%)
|
|
East of England
|
£1,111
|
£1,301
|
£190 (15%)
|
|
South East
|
£1,254
|
£1,469
|
£215 (15%)
|
|
London
|
£2,053
|
£2,546
|
£403 (19%)
|
Out of the 12 regions, it’s split 50/50, where in six regions it’s cheaper to buy (Table 1) and in the other six it’s cheaper to rent (Table 2). This may vary depending on your individual circumstances, so it’s worth looking into it with a local property expert who can give you a fuller picture according to your needs.
