Buyers in Cambridge could be over £900,000 better off than renters
Tenants of a typical home in Cambridge would be approximately £958,227 better off over 25 years if they bought the property instead, new research has found.
Researchers from Countryside compared the lifetime gain or loss of someone renting a property to the lifetime gain or loss of buying an average home. Because buyers will own an asset once they have paid off their mortgage, this is creating a remarkable divide between buyers and renters, leading to a property divide whose wealth will be substantially less than those buying over a 25 year period.
The firm’s analysis suggests that while it may seem as though renting can be the cheaper option, but overtime, the property winners are those who buy and are left with an asset after 25 years.
Looking at the costs of buying or renting an average Cambridge house priced at £450,426, buyers can gain over £918,000 after 25 years. This average house price reflects the latest figures published by the UK’s Valuation Office Agency under the category ‘all properties’
‘Cambridge has a unique offering that few other cities can replicate, in that it gives residents the chance to enjoy contemporary living in one of England’s most historic cities. With excellent education and transport links, Cambridge also offers home buyers a good investment for the future,’ said David Everett, managing director of Countryside’s new homes and communities Central region.
‘The outstanding Perse School lies within walking distance of our developments, along with the Cambridge Guided Busway providing the fastest connections to destinations including Cambridge railway station and the city centre,’ he added.
Countryside calculated the average rent using figures from the Government’s Valuation Office Agency and modelled how they are likely to increase in line with projected house price rises. It then modelled current and projected mortgage rates over a 25 year period using 25 year swap rates and current MFI bank margins.
It used current house prices from Land Registry and modelled potential house price rises and capital gains using projections from the Office of Budgetary Responsibility for the next six years and a conservative long term house price annual growth rate of 3.7%.