The latest analysis of data from the Office of National Statistics (ONS) indicates that renters will soon be paying more than homeowners.
This latest look at the ONS’ Family Spending Report is from campaign group Pricedout, who represent prospective homeowners locked out of the market. Looking at the data on housing costs, they have found that the cost of renting is rising at twice the rate of mortgage costs.
The ONS data covers the period of 2010-12, and shows that during that time, the average rent rose by 12% to £136 per week. In the same period, mortgage payments increased to £138.60 per week - an increase of just 6%.
According to Pricedout, this suggests that the average renter will soon be paying more for their home than the average homeowner, while receiving none of the benefits of rising property prices. They highlight that, while mortgage payments can be considered an investment that moves the buyer gradually towards full home ownership, rental payments are simply an ongoing monthly cost that continues to rise.
It is predicted that property prices will continue to rise in 2014, as the second phase of the government’s Help to Buy scheme takes off in earnest. It is also thought that any economic recovery will lead to an increase in demand for housing in major cities, which could drive rents up even higher.
Pricedout spokesman Dan Wilson Craw also highlighted that, as a percentage of their income, renters pay more on average than homeowners - without being able to enjoy a stake in the value of their home. Commenting on the findings, Wilson Craw said:
“How can we be expected to save for a deposit on a house, save for a pension, and enjoy an increase in living standards if rent is rising at a vastly higher rate than income? Our broken housing market is leaving more people priced out of home-ownership and forcing them to compete over a limited number of homes.”