U.K.’s Sky-High House Prices Are Still More Affordable Than Rent

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U.K. house prices are at an all-time high but buying a home is still cheaper than renting, with the gap last year growing to the widest since 2015.

Mortgage lender Halifax estimated the average monthly cost of purchasing a three-bedroom property was 759 pounds ($1,000), below the 874 pounds rental payment for a similar property. The difference amounts to 1,378 pounds a year, a 50% increase from 2020.

The findings underscore the impact of record-low mortgage costs, which have changed little since the Bank of England started talking about raising interest rates late last year. That’s helped more people afford house prices that have hit new highs routinely through the pandemic.

“Historic lows for interest rates have kept mortgage costs down compared to rents,” Esther Djikstra, director of mortgages for Halifax, said in a report released Saturday.

The cost of buying last year rose just 2% last year, while rents jumped 6.4%. The biggest hurdle to buyers is putting together a deposit, which averaged over 62,400 pounds for first-time buyers and typically covered a quarter of the purchase price.

That bar is higher in London, where the average down payment of 173,021 represented a third of cost. Even so, London buyers saved 4,181 pounds a year over renters, who are paying landlords more than 1,700 pounds a month on average, Halifax said.