If you’re thinking about getting on to the property ladder, you’re probably wondering whether buying is better for your finances than renting. Put it this way. From January 2005 to June 2019, the average UK house price rose from £150,633 to £230,292 - a 53% increase. And despite the current economic uncertainty, UK house prices are still creeping up. They grew by 0.9% in the year to June 2019, according to the Office for National Statistics.
Whilst house prices have risen in the long term, it doesn’t mean they’ll continue to, of course. It’s also important to remember that average UK house prices have fallen in the short term, sometimes dramatically. As an example; in September 2007, the average house in the UK cost £190,032. By March 2009, (hot on the heels of the 2007/8 financial crisis) they’d sunk to £154,452, a fall of 18.72% according to the Office for National Statistics. It's cheaper to buy than rent
It’s certainly cheaper to buy than rent at the moment, according to research published in August 2019 by Capital Economics, a research consultancy. The monthly cost of paying the interest on a new mortgage is now 62% lower than renting, the consultancy found.
To decide whether it's cheaper to buy or rent, you need to compare the interest you pay on a mortgage with rent. You exclude the capital because paying the capital is a form of investment as it’ll reduce your mortgage and increase your equity.
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