Buying a house is now cheaper than renting one

-16%

Sources: Halifax, Birmingham Midshires and ONS

*Weighted average of regional data using housing tenure figures.

This is largely down to recent declines in house prices and mortgage rates pushing down home buying costs, Halifax said.

The average mortgage rate has fallen from 5.75% in 2008 to 3.63% in 2011, while the average house price has dropped 11% over the same period, according to Halifax. Average monthly mortgage payments are down by nearly a third – some £242.

Rentson the other hand have increasedsome 9% since 2009. This is largely a result of increased demand from first time buyers struggling to get a foot on the housing ladder -withdeposit requirements more than double in size compared to a decade ago.

Martin Ellis, housing economist at Halifax, said: ‘The affordability gains for buyers relative to renters in the last three years have been significant’.

‘Nonetheless, despite the improvement in the relative affordability of buying a home, the number of purchasers has continued to fall due to the ongoing challenges in raising a deposit and the considerable uncertainty over the prospects for the UK economy, which have severely constrained housing demand’.

Halifax estimates that there were around 510,000 home purchases with a mortgage in 2011, the lowest annual total since 1974 and 6% lower than in 2010.