Buying is 13% cheaper than renting
Falling house prices and increasing rental demand has made it cheaper to buy a property than to rent in 45 of the 50 largest British towns, data from Zoopla has shown.
The cost of renting is now 13 per cent more on average than the cost of owning, Zoopla's research revealed.
The top five areas where it is cheaper to buy than rent is Milton Keynes by 39 per cent, Birmingham by 34 per cent, Northampton by 33 per cent, Warrington by 32 per cent and York by 29 per cent.
London came seventh on the list.
In London, where the average asking price for two-bedroom flats currently stands at £430,608, buying still beats renting by a significant margin.
The average monthly rent in the capital today is 28 per cent more than the cost of ownership, leaving renters paying an extra £5,964 annually compared with owners.
Zoopla compiled the data by analysing the asking prices and rents for all two-bedroom flats currently on the market, comparing the rental cost to the cost of ownership based on servicing an interest-only mortgage at 5 per cent a year.
Nicholas Leeming, business development director of Zoopla, said: "With house prices down, low interest rates and sky high demand in the private rental sector, buying has never been a better option for those able to secure a mortgage.
"And with owners reducing prices further in order to achieve a sale before Christmas, there may well not have been a better time to buy in recent times."
Richard Sexton, director of E.surv chartered surveyors, warned the cost of renting will continue to increase until the banks can offer more appropriate mortgage products to buyers.
He said: "At present, the banks are being held back by weak economic growth and the spectre of a double-dip recession, as well as the regulator’s insistence they hold more capital. They are in no mood to target first-time buyers."
However, E.surv's data showed mortgage lending criteria has loosened marginally at the bottom end of the market as lenders begin to make grabs for a larger share of the market.
Mr Sexton said: "But while more buyers able to secure a deal with an 85 per cent or higher loan-to-value (LTV) than at any point since May 2010, this is not happening on a large scale.
"As a result, it is barely rippling the surface of the ocean of would-be buyers who are being forced to rent while lenders continue to demands big mortgage deposits."