Buying cheaper than renting in 41% of English and Welsh markets
Monthly mortgage payments have fallen below local rental costs in 41% of local authority areas across England and Wales, according to research published by Pepper Money. The lender’s analysis, based on Office for National Statistics data, reveals a shifting affordability landscape that favours purchasers over tenants in a growing number of markets.
The First-Time Buyer Index compared property prices, rental costs, mortgage payments, earnings and deposit requirements across England and Wales. The study found the average first-time buyer property costs £261,700, while monthly rent for a three-bedroom home averages £1,269.
Northern England dominates affordability rankings
Northern regions claimed 13 of the top 20 positions for first-time buyer affordability, with the North East showing particularly strong value. Middlesbrough ranked first, followed by Burnley and Merthyr Tydfil, driven by lower house prices relative to local earnings.
Every North East local authority except Northumberland, which placed 73rd, recorded lower estimated monthly mortgage payments than local rents. The findings contrast with recent debates around rental affordability, where tenants have expressed concerns about rising costs.
Rugby was the only top-ten location where renting remained cheaper than buying, by £44 monthly, securing its position due to high local earnings compared to house prices.
Urban centres offer significant savings
Manchester and Salford, despite higher average property prices than many northern locations, ranked highly because elevated rental costs meant buyers could save more than £3,000 annually by purchasing rather than renting. Southampton offered the largest annual saving among top-ten locations at £3,924.
The analysis identified a further 94 local authority areas where monthly ownership costs were within £100 of renting, suggesting the buy-versus-rent calculation remains marginal in many markets. This comes as landlord yields have shown variation across different property types and regions.
Market implications
The data indicates a geographical divide in housing affordability, with northern England offering better value propositions for first-time buyers. The findings may influence investment decisions and regional migration patterns, particularly as the gap between ownership and rental costs widens in certain areas.
The study’s methodology focused on comparing monthly costs rather than total purchase expenses, meaning deposit requirements and transaction costs remain significant barriers for many potential buyers despite favourable monthly payment comparisons.
