Ahead of the housing market's upcoming peak season, a new study has shed light on the regions where buying could prove more cost-effective than renting. In 41% of local authority areas across England and Wales, the average monthly mortgage payment is lower than typical local rent, with first-time buyers in the North East facing the lowest costs.
The analysis by Pepper Money used Office for National Statistics data to assess various factors including property prices, rental costs, mortgage expenses, local earnings, and deposit requirements. Results revealed that the average first-time buyer property across England and Wales is priced at around £261,700, while monthly rent for a three-bedroom home averages £1,269.
Of the top 20 locations in the index, 13 are situated within the North East or North West of Northern England. Middlesbrough tops the rankings, followed closely by Burnley and Merthyr Tydfil. These areas boast lower house prices and better affordability compared to local earnings. Every local authority in the North East – except for Northumberland – reports lower estimated monthly mortgage payments than local rents.
Even in cities with higher average property prices, such as Manchester and Salford, rental costs are so high that buyers can save over £3,000 annually by purchasing a home instead of renting. Southampton offers the greatest annual saving among top locations, with buyers potentially saving £3,924 per year. An additional 94 local authorities show monthly homeownership costs within £100 of renting, suggesting the gap between buying and renting is narrowing nationwide.
However, Rugby stands out as an exception in the top ten, where renting remains £44 a month cheaper than buying due to strong local earnings relative to property prices. This study highlights regional variations in the UK housing market and provides valuable insights for prospective homeowners navigating high rental costs.