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Buying vs Renting in 2018

Published: 16 Nov 2017

It’s safe to say that the housing market has been through some heavy changes in the past 20 years. Price rises, fluctuating mortgage rates and economic woes have made it much more difficult to get on the housing market, or to move up the ladder for those who have already bought their own home.

Whether you’re renting and hoping to buy, planning to up/downsize from your current property, or you’re weighing up whether buying a home is right for you at all in the year to come, this guide should help you decide what’s best for your circumstances.

The UK housing market

The housing market in the UK differs considerably depending on what region you live in. Of course, London is by far the most expensive area where property value is concerned, and demand for homes is high. On the other hand, the average price of properties in Northern Ireland has fallen by more than 40% in the past ten years. As a general rule, house prices and demand tend to be higher in the south, and lower in the north. This doesn’t mean that it’s necessarily easier to get on the property ladder in cheaper areas, however.

When we look at home-buying trends over the past 10 years, we can see that there’s been a drop in the number of homes being sold. This fall has come mainly from those who already live in their own property and who want to move. This is often down to growing families, where more space is required as the years go by. As house prices have risen, many of these households have opted to extend or adapt their current property instead, as this tends to be more cost effective.  

The UK in general has not been building enough homes to cover the rising demand for a number of years. This has pushed the value of homes up and has caused a shortage of affordable homes in many areas. After the recession, the banks are much stricter when it comes to mortgage lending, making it even harder for first time buyers. Not only do you need a good credit score to secure a mortgage, but you also need to have saved up a considerable amount for a deposit. Unless you’re able to live with parents in order to raise this cash - or if you’re lucky enough to be able to dip into the ‘bank of mum & dad’ - this can be very hard to achieve whilst renting.

As hard as it is now to get on the property ladder and to keep moving up the ladder once you’re on it, schemes like Help to Buy are making it a little easier for some. 

Is it best to rent or buy in 2018?

While no one can say for sure exactly what will happen to the housing market next year, there are trends and clues to take notice of. As wages and employment stability are failing to keep up with rising house prices, demand is falling. Many people would like to buy, but are completely priced-out of the market. In fact, in 1990 it took around 2 years to save a deposit, and in the year 2000 it would have taken 6 years. By 2016 the same group would have to save for 19 years for a deposit, which is clearly prohibitive.

Renting is also expensive, and this is why many are stuck in rental properties, as the costs simply do not allow them to save enough for a deposit. Between 1st April 2016 and 31stMarch 2017, the median monthly rent in England was £675 per month. Of course, the price of renting can vary hugely from area to area. In London the median monthly rent was a whopping £1,495, for example. Although the cost of renting can seem very high, it may be a cheaper long-term option in some areas. There is some suspicion that house prices are reaching their peak, as it was found that renting a property was cheaper than buying in over half of British cities back in May. 

Whether it’s the right time to buy or not depends on your circumstances and the housing market in your area. It’s important to do plenty of research beforehand and weigh up the pros and cons of continuing to rent or deciding to buy. While house prices seem to be plateauing in general, it may be wise to wait and see what happens as we move into 2018. Brexit uncertainty and potential mortgage rate rises could well affect your ability to pay for a new home if your budget is tight. However, a fall in house prices may well be worth taking advantage of.

In the next two years it is thought that house prices will fall in real terms, but demand will still outstrip supply due to not enough homes being built. This means that prices will not crash or plummet severely, but that homes may become more affordable in comparison.

Benefits of renting

  • Potentially lower monthly payments
  • Greater flexibility about where you live
  • Short-term commitment
  • Landlord is responsible for maintenance/repair costs
  • Fixed-rate mortgage keeps outgoings steady & predictable
  • Ability to build equity
  • Greater privacy (no landlord inspections etc.)
  • Freedom to decorate how you like

Benefits of buying a property

  • Fixed-rate mortgage keeps outgoings steady & predictable
  • Ability to build equity
  • Greater privacy (no landlord inspections etc.)
  • Freedom to decorate how you like

Alternative ways to get on the housing ladder

Living in your own property doesn’t always mean having to go down the traditional route. Some people are choosing to buy land with planning permission, or buy a cheaper, run down property to demolish and build their own home. Many housing companies are providing pre-fabricated eco homes for £75,000 - £100,000. This can be much cheaper overall than buying a detached property in the normal manner.

If buying the property you already rent becomes an option, this can help you save a lot of money in moving costs, and you have the benefit of already knowing the property and its potential issues. Buying a property alongside a trusted friend or family member can help you to get on the ladder sooner than you would have alone, but of course this must be considered carefully before you make any commitments.

Whether renting or buying is best for you in 2018 will take some thought and research on your local housing market in relation to your circumstances. Keeping an eye on the news and financial markets can give you a good idea of when the right time to buy is for you. Remember to look at a range of news sources to get a rounded view of the current market. It may also be helpful to speak to family and friends about their experiences to get an idea of what’s available to you in your area.