Should You Buy Or Rent In 2022?
For a long time, the prevailing wisdom has been that it is cheaper to buy than to rent. For most people, mortgage payments are lower than rental costs for equivalent properties. Of course, you require a deposit to buy a home, so it can be a more challenging state to reach. However, given a choice, it has been better to buy if you can. But, in 2021, that was no longer the case.
Who’s Better Off?
The comparison compares buyers with 90% mortgages to renters. Before the pandemic hit, those with mortgages were paying around £100 less per month than renters. In 2021, though, we reached a position where renters were about £70 a month better off than these first-time buyers.
These numbers are, of course, averages, and things do vary based on location. Scotland, the North East and Yorkshire are three areas where it’s still cheaper to buy a property rather than rent. But as you head south, the picture changes. In fact, London is a location where the difference shifts the most in favour of renters.
What Caused The Change?
During the pandemic, house prices rose, and so did mortgage rates. A lot of lenders also withdrew their 90 and 95% mortgage offers, making it more complex and more expensive for first-time buyers to get a mortgage.
In many cities, rents have stayed the same or dropped during the pandemic. With remote working, people could move out of the cities to areas with more space without worrying about the commute.
The combination of these factors has led us to the situation where renting works out as the cheaper option.
How Long Will It Last?
Most experts agree that the rise in house prices is unsustainable. With the end to the stamp duty waiver, most estate agents expect that house prices will level off and may even start to drop. The slowdown in prices will bring down the cost of mortgages.
There are also indications that rental prices may be set to rise again. This is especially true inside city centres which were hit the hardest by the pandemic.
Experts predict that by the second half of 2022, it may be cheaper to pay a 90% mortgage than to rent.
Is It Worth Buying A House in 2022?
If you plan to buy your first home in 2022, it might be worth waiting just a little longer, depending on your region. From a purely financial standpoint, it will be more cost-effective for most people to continue renting for a while longer.
If you can wait until house prices begin to drop, you may find that you are able to either get a home at a lower price or to get a larger property for your money. The other reason you might want to consider waiting a few months if you can is that more mortgages are becoming available.
During the pandemic, a lot of banks withdrew their mortgages which were aimed at first time buyers. The banks have begun to signal that they plan to reintroduce more mortgages specially designed for first-time buyers.
If you need an assessment, why not book today to understand your current position and learn where the most cost-effective improvements can come from to keep your properties as energy efficient as possible.
Should You Buy Or Rent In 2022?