The average monthly costs associated with owning a three bedroom house stood at £645 in December 2013 which is 16% lower than the typical monthly rent of £769 paid on the same property type the lender says.
This is the largest cash difference since 2009, when the figure stood at just £6 and average monthly costs for owning and renting were £646 and £652 respectively.
The Halifax says that the gap between the costs of owning and renting is being driven by average monthly rents increasing by over £100 since 2009, while average monthly ownership costs have remained relatively unchanged over the same period.
Today’s picture is in stark contrast to the situation for renters five years ago when, in 2008, the monthly ownership cost was on average £226 or 31% higher than rental costs.
‘There has been a substantial improvement in the affordability of owning compared to renting in recent years, which has been driven by the fact that monthly home ownership costs have fallen by 32% since 2008,’ said Craig McKinlay, mortgage director at the Halifax.
‘Buying will continue to be a more financially attractive option as the cost of owning a home remains stable. With greater availability of mortgages that require smaller deposits, the property ladder has also become even more accessible for those who can afford the monthly costs of owning but had previously not been able to save the necessary deposit,’ he added.
But the research also shows that there are large regional variations. For example, owning a home is most affordable compared to renting in London with the typical home buyer paying £188 a month less than the average renter at £1,196 against £1,384.
On the other hand, in the West Midlands and East Anglia the difference is marginal, with average monthly buying costs just £6 lower than average monthly rental costs at £553 against £559 and £633 against £640 respectively.
Also, the level of deposit required by buyers varies significantly across regions, particularly for first time buyers in London, which is also likely to influence whether then can afford to buy.
The research shows that while home buying is at its highest level for five years, it remains well below peak. The lower costs of owning compared with renting, an improved economic outlook and a greater availability of mortgages that require a smaller deposit may have contributed to the 15% increase in the number of house sales in 2013 compared to 2012. Sales last year were the highest since 2007 at 1,619,000 but were still 34% lower at 1,069,000.
