Research has compared the average cost of buying versus renting, highlighting the investment opportunities that homeowning can offer.
By the second year of homeownership, buyers are likely to be saving about £99 when compared with renters. The gap in wealth creation only widens over time, with homeowners potentially saving around £12,157 by the tenth year. This rises to £206,031 over 30 years. If homeowners decided to invest their savings, their returns could grow even more.
The report* showed that the wealth created from homeowning varies depending on the region. Renters in London are potentially missing out on £540,687 over 30 years of homeownership. The gap is wider in Bristol, where homeowners could save £573,110.
Barriers to homeownership
Although owning a home comes with benefits, many renters do not believe it is attainable. Two thirds (65%) of those renting hope to buy, with the same proportion (64%) recognising that homeowning offers more long-term financial security. However, a quarter (27%) of renters don’t think they could ever afford their own home. Meanwhile, only 8% say they prefer the flexibility that comes with renting.
High property prices seem to be the most common barrier to homeownership, with 61% of renters citing this as an issue. Some 56% said that saving for a deposit was a challenge, followed by 32% pointing to income insecurity.
Reasons to be optimistic
Promisingly, only 11% of 25 to 34-year-olds thought that homeownership was out of reach for them. This proportion went down to just 7% for 18 to 24-year-olds. Also, 56% of tenants would consider buying if their monthly mortgage repayments were the same price as their rent.
In some regions of the UK, this is becoming feasible, so this may help renters to grow in confidence in the coming years.
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.