First-time home buyers in Scotland £860 a year better off compared to renters
The average monthly costs (including mortgage payments1) associated with buying a three-bedroom house stood at £5222 in December 2016 – £72 lower than the typical monthly rent of £5933 paid on the same property type.
This 12% difference is the largest across the country compared to the UK average saving of 7%.
Over the past year the gap between the costs of buying and renting in Scotland has narrowed by £49 per month.
At the end of 2015, the monthly cost associated with buying was £121 lower than renting (19%, £524 versus £645). This is in contrast to average UK buying costs which, over the last year, have risen by 5%.
The costs associated with a first time buyer purchasing a home in Scotland have been cheaper than renting since 2009, when average buying costs dropped from £756 per month in 2008 to £505.
The average monthly rental payments have increased by only £30 since December 2008, however buying a property has changed from being £184 more expensive each month, to £38 cheaper.
By December 2015 the buying versus renting gap peaked with a 19% difference – average renting costs jumped to £645 (from a previous high of £599 in December 2014), while average monthly buying costs dropped to £524 (£536 in December 2014).
For the UK as a whole, first time buyers were still better off buying a property than renting in December 2015, however there was only a 10% difference (£671 buying v £744 renting) compared to Scotland’s 19%.
Buying a house is more affordable than renting in all 12 UK regions, with the difference being most significant in Scotland (12% cheaper).
Buying is most affordable compared to renting in London with the typical first-time buyer paying £161 (10%) a month less than the average renter (£1,420 against £1,581); an annual saving of £1,927.
In East Anglia there is little difference, with average monthly buying costs just £7 lower than average monthly rental costs (£736 against £743).
The number of first-time buyers in Scotland reached 23,0004 in 2016 (January-September),totalling over 20,000 for the third successive year, growing from 22,000 in 2015 (up 4.5%) – the highest level since the start of the financial crisis in 2007 (27,000).
Having reached a low of 12,300 in 2009, the number of homebuyers getting on to the first rung of the property ladder has grown by 87% to its current level.
However, first-time buyer numbers still remain 21% below the immediate pre-crisis peak of 29,200 in 2006.
The number of first-time buyers accounted for 49%5 of all house purchases made with a mortgage in 2016.
This share has grown from 35% at the start of the housing downturn in 2007.
The average deposit put down for a typical three-bedroom first-time buyer home in Scotland is £21,2976.
In London the average deposit of £110,927 – the highest – is not only seven times higher than the lowest in Northern Ireland (£15,830) but also more than twice the amount in the South East (£51,082), the next highest. ■