Property in 2012 – To Buy or to Rent?

Current research by the Halifax suggests that the cost of buying a home has fallen significantly and renting a property is now more expensive than buying one. The boom in buy to rent property investment and rising property prices in the run up to the recession saw many first time buyers priced out of the market with high interest rates and lenders requiring large deposits. This meant many were forced into renting a property rather than buying their first home.

With demand for rental properties at an all time high, the cost of renting has risen by around nine per cent in the last three years.

However, those looking for property investment have had an unexpected boost as the financial crisis in Europe has forced interest rates down and house prices are remaining static.

Good News for Buyers

More good news for potential buyers is the return of low deposit mortgages. With many lenders reducing deposits to encourage buyers into real estate investment the outlook is getting better. There has also been an increase in lenders offering home loans requiring a deposit of just five per cent.

With the increasing availability of low deposit mortgages and low interest rates, many people are now seeing investing in properties as the more affordable choice, as the cost of renting continues to rise due to high demand.

The research suggests that those investing in properties instead of renting could save themselves around one hundred pounds each month, based on the cost of an average three bed property. This means a sixteen per cent difference in cost between buying and renting. This is in stark contrast to three years ago when renting was around thirty per cent cheaper than the monthly cost of paying off a mortgage.

The current recession and financial insecurity means that buyers are still being cautious, although some areas have had an increase in mortgage applications the threat of another recession still puts many buyers off. This means that those who can afford to invest in properties will face less competition from other buyers, prices are likely to remain static and low mortgage interest rates make buying more affordable.

Those deciding to change to real estate investment after having rented a property will find there may be significant savings to be made. In addition to the monthly savings gained, due to the current low property prices, your property investment is likely to see financial gain as property prices recover.

Al is a guest writer for

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