Buying beats renting in Aberdeen, but it pays to rent in London

  • Buyers in Aberdeen will be £99,000 better off compared to renters after 7 years
  • Dundee, Glasgow, Cambridge and Edinburgh also compelling to buy vs. rent
  • Buying in London with a 10% deposit takes 18 years to become more cost effective than renting
  • Bournemouth, Huddersfield, Bedford and Swansea also make sense to rent not buy

Aberdeen is the most cost-effective town in Britain for buying property compared to renting. Over a typical seven year period, the average property owner in the Scottish town can expect to be £99,040 better off compared to the equivalent renter, according to research from property website Zoopla.co.uk.

The latest Rent vs. Buy analysis from Zoopla shows that it takes buyers in Aberdeen with a 10% just one year of ownership for buying to become more cost effective than renting. The average property price in Aberdeen is currently £206,060 with average monthly rents at £1,275.

London is currently the most renter-friendly location in Britain. After seven years, a typical London renter would be £82,412 better off than a buyer with a 10% deposit of an equivalent property. It would take 18 years for a London buyer with a 10% deposit to begin to be financially better off compared to the equivalent renter. These calculations are based on a conservative estimate of 4% annual house price growth in the capital.

Bournemouth is the second most renter-friendly town in Britain. With average asking prices of £380,206 and average rents of £1,024 it would take twenty two years for a buyer with a 10% deposit to be better off compared to a renter in an equivalent property. After a seven-year period, a typical renter in Bournemouth would be £30,719 better off than a typical buyer with a 10% deposit.

Lawrence Hall of Zoopla.co.uk said: “Despite taking longer to be better off financially, London remains the holy-grail in terms of property investment. It is much more buyer-friendly outside the capital but with rising average prices and low savings rates, accumulating a deposit has become increasingly difficult. It is important to remember that whilst renters may be better off in the short to medium term in some areas of the country, buyers are making a long-term investment. With most buyers opting for mortgage terms of 25 years, over the long term, buyers are likely to be better off compared to those who choose to rent.”

The Zoopla Rent vs. Buy methodology compares all of the costs associated with buying or renting as well as increases in asset or savings value over time. The analysis forecasts the amount of time it will take for buying to become more cost effective than renting across the largest towns and cities in Britain and compares how much buyers or renters are financially better off after the average tenure of a house.

BEST LOCATIONS FOR BUYING

 

Location

 

Av. Asking Price

 

Av. Monthly Rent

Amount buyers are better off after 7 years (10% deposit)

Aberdeen

£206,060

£1,275

£99,040

Dundee

£96,103

£653

£54,378

Glasgow

£139,841

£722

£40,971

Cambridge

£337,586

£1,334

£28,878

Edinburgh

£224,000

£948

£32,725

Coventry

£191,833

£849

£33,730

Newcastle

£180,516

£812

£33,726

Manchester

£178,069

£781

£29,751

Milton   Keynes

£264,038

£1,066

£25,345

Birmingham

£163,594

£719

£27,171

Source: Zoopla.co.uk (February 2014)

 

BEST LOCATIONS FOR RENTING

Location

 

Av.   Asking Price

 

Av.   Monthly Rent

Amount   renters are

better   off after 7 Years

(10%   deposit)

London

£896,124

£2,619

£82,412

Bournemouth

£380,206

£1,024

£49,082

Huddersfield

£177,119

£561

£7,680

Bedford

£288,598

£959

£7,306

Swansea

£185,373

£631

£204

Source: Zoopla.co.uk (February 2014)

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Property market confidence soars to highest level for 4 years

  • UK homeowners predict 7.2% increase in property prices over first half of year
  • 92% of homeowners expecting property prices to rise between now & summer
  • Londoners most confident with 98% of owners in capital saying prices will rise
  • Biggest increases in confidence seen in North signalling a broadening recovery

UK homeowners predict house prices will rise 7.2% between now and summer, up from 5.7% just three months ago and from 3.2% this time last year, making it the most upbeat forecast in four years, according to the latest Zoopla Housing Market Sentiment Survey.

The survey of 7,796 UK homeowners by Zoopla found that 92% of homeowners expect house prices in their area to rise over the next six months, up from 65% last year and the highest proportion on record. Only 3% of homeowners predict house prices will fall over the first half of this year, down from 19% at this time one year ago.

The survey further revealed that as homeowner confidence is buoyed, there has also been an increase in those considering buying a property over the next six months in the first half of 2014 – up to 22% from 19% back in September.

Londoners remain the most optimistic about the state of the property market, with 98% expecting a further rise in property values in the capital during the first half of the year and predicting average price growth of 9.6% over this period, above the national average of 7.2%.

In a positive sign for the broadening out of the market recovery, the most significant jump in confidence can be found in the North with Yorkshire and The Humber and the North West where the proportion of owners who believe property prices will increase over the next six months has risen from 84% to 88% in just 3 months. At the other end of the spectrum, homeowners in Wales are the least bullish on house prices currently, with only 85% of homeowners predicting a rise in property prices by June.

Lawrence Hall of Zoopla.co.uk commented: “Across the country, homeowners are starting the New Year far more positive about the health of the property market. Early indicators suggest that we can look forward to a busy first few months to 2014, as current levels of confidence are likely to fuel more transactions. With 2013 characterised by the wave of government initiatives to lure first-time buyers onto the property ladder, 2014 could well be the year we see activity levels increase significantly.

 

PROPORTION OF HOMEOWNERS EXPECTING PRICES TO RISE BY JUNE

Region

Rise   (%)

Flat   (%)

Fall   (%)

London

98%

2%

1%

South East England

96%

3%

1%

East of England

95%

3%

1%

South West England

94%

4%

2%

West Midlands

93%

5%

2%

East Midlands

89%

7%

2%

Yorkshire and The Humber

88%

8%

4%

Scotland

88%

7%

4%

North West England

88%

8%

4%

North East England

87%

8%

5%

Wales

85%

7%

9%

Source: Zoopla.co.uk (January 2014)

 

% HOMEOWNERS EXPECT PROPERTY VALUES TO INCREASE BY JUNE

Region

Now

1   year ago

London

9.6%

5.8%

East of England

7.5%

3.4%

South East England

7.5%

2.5%

North West England

7.3%

2.4%

South West England

7.3%

3.6%

West Midlands

6.9%

3.5%

Scotland

6.3%

4.2%

East Midlands

6.1%

3.1%

Yorkshire and The Humber

5.8%

4.6%

North East England

5.7%

3.3%

Wales

5.5%

1.8%

Source: Zoopla.co.uk (January 2014)

 

Paper Summary: 18th December 2013

Property
A new record 400,000 property owners are now property millionaires, that’s translates as twice as many as five years ago according to Zoopla. The number of homes worth £1 million or more has increased by a third over the past twelve months, thanks to soaring house prices in London and South East. The lack of supply of new homes in the capital was to a great extent responsible for driving forward a further 57,120 over the £1 million mark which equates to 156 new property millionaires a day in the capital throughout 2013, as shown by Zoopla. Prices are still rising according to the latest ONS figures, by 5.5% in the past 12 months, and the rise is even higher in London, jumping by 12%. Marsh & Parsons highlighted that prices are at more than double the rate of other areas , while Prime London continues to be a honeypot for UK and overseas buyers, as demand remains intense. As a result, LSL highlights that first time buyers are still having to leap higher than ever before to join the property ladder.

Personal Finance
Over half of UK shoppers are heading to discount shops, visiting an Aldi or Lidl figures revealed, for the first time ever. More than 13 million used the budget stores in the past three month, up from 46.1% a year ago. As a result all of the big four grocers have lost market share, as the so-called budget shops now make up a combined seven per cent of the total market. Credit crunch bargains are proving attractive across the country, as value continues to be a great incentive. Although Lidl and Aldi may not be as prevalent in London, more common in regions where shoppers can drive to do a food shop, this is likely to change, as more shops are expected to open next year. The type of customers are also said to be changing – those known as ABC1s (the traditional middle classes) make up just 25% of shoppers in 2011. Last year that rose to 41%, proving that Aldi is no longer the store of the cash strapped student.

Economy
Britons believe that securing growth as their top economic priority is more significant than higher wages according to a survey for the Independent. The ComRes survey findings suggest that the Conservatives message on the economy may resonate more than Labour’s campaign on reducing the cost of living. Their competing messages will lead to a fierce battle in the run up to the 2015 election. It’s interesting to note that in a list of important priorities over the next five years from a range of options, at the top was ensuring the economy continues to grow, followed by ensuring wages increase faster than prices, thirdly keeping inflation down and finally reducing the deficit. Now that the economy is growing the Tories will take comfort in the fact that that the findings show people view growth as the top factor.

Recruitment
More than half of the UK is said to be ripe for fracking according to a new Government report by engineering giant Amec, that shows a shale gas boom could create up to 32,000 new jobs. These plans have been met with mixed responses with some arguing it will cast a dark shadow over many communities in Britain who could now face the threat of fracking in their backyard. A new licensing round to enable firms to search for shale gas will begin in the summer. There could be between 14 and 51 vehicle movements to a fracking site each day over a 32 to 145-week period which could have a serious impact on traffic congestion, noise or air quality, depending on existing roads, traffic and air quality.

Number of British Property Millionaires Climbs by a Third in 2013

 

  • 92,985 new property millionaires created across Britain in 2013 (255 per day)
  • 61% of all Britain’s property millionaires can now be found in London
  • Kensington and Chelsea home to highest number or property millionaires
  • Wales is British region with the fewest number of property millionaires

Continued strong demand for prime residential property throughout 2013 has created 92,985 more property millionaires in Britain over the past 12 months, according to the latest research from property website Zoopla.co.uk.

The total number of British property millionaires now stands at 393,127, up 31% compared to this time last year, with a high concentration in London and the South East as a result of strong house price growth at the top-end of the property market. As 2013 draws to a close, 1.4% of British homeowners will finish the year as property millionaires.

61% (239,703) of all Britain’s property millionaires can now be found in London. Limited supply of prime property in the capital has pushed the value of a further 57,120 London homes over the £1 million mark in the last 12 months, creating 156 new property millionaires in the capital every day throughout 2013.

The exclusive borough of Kensington and Chelsea is home to the highest number of property millionaires totaling 41,393 (17% of the capital’s total), despite being the smallest London borough covering just 12km². Westminster (40,087), home of such famous Monopoly addresses as Mayfair and Park Lane, and Camden (23,873) round out the top three London boroughs with the most property millionaires.

Outside London, 21,028 more property millionaires were created in the South East during the past year, bringing the total to 82,614. The highest proportion of property millionaires outside the capital can be found in the affluent Surrey area of Virginia Water (GU25) where 32% of homes are now worth over £1 million. Beaconsfield (HP9) and Chalfont St Giles (HP8) come in second and third respectively for having the highest proportion of million pound homes. Wales is home to the fewest property millionaires in Britain, numbering just over 1,000 in total but still up 24% on 2012.

Lawrence Hall of Zoopla.co.uk said: “While Government schemes such as Help to Buy have concentrated popular attention on the lower rungs of the property ladder this year, there’s been a hive of activity propelling house price growth at the top-end of the market. As more and more British properties climb past the million pound level, the impact of a possible Mansion Tax would be wide reaching and risk impacting a significant number of British homeowners both at the top of the market and on the lower rungs of the property ladder.”

NUMBER OF PROPERTY MILLIONAIRES BY REGION

Rank

 

Region

No. of property millionaires

(Dec 2013)

No. of property millionaires

(Dec 2012)

Change over last 12 months

1

London

239,703

182,583

57,120

2

South East England

82,614

61,586

21,027

3

East of England

28,128

20,470

7,659

4

South West England

13,960

12,094

1,866

5

North West England

7,043

5,586

1,457

6

West Midlands

5,418

4,087

1,331

7

Scotland

8,161

7,264

896

8

East Midlands

2,667

2,003

664

9

North East England

2,574

2,082

492

10

Yorkshire & Humber

1,814

1,541

273

11

Wales

1,043

844

199

TOTAL

393,127

300,142

92,985

 Source: Zoopla.co.uk, December 2013

 

HIGHEST PROPORTION OF PROPERTY MILLIONAIRES

Rank

Area

Avg. property values (Dec 2013)

Proportion of £1m+ properties

1

South Kensington (SW7)

£2,092,053

71%

2

Kensington (W8)

£2,498,512

70%

3

Chelsea (SW3)

£1,982,268

56%

4

Westminster (W1)

£1,432,036

51%

5

West Brompton (SW10)

£1,540,704

46%

6

Belgravia & Pimlico (SW1)

£1,473,567

44%

7

Notting Hill (W11)

£1,597,498

42%

8

Earl’s Court (SW5)

£1,188,062

42%

9

Fulham (SW6)

£1,034,246

38%

10

Hampstead & Belsize Park (NW3)

£1,218,532

37%

Source: Zoopla.co.uk, December 2013

 

HIGHEST PROPORTION OF PROPERTY MILLIONAIRES (OUTSIDE LONDON)

Rank

Area

Avg. property values (Dec 2013)

Proportion of £1m+ properties

1

Virginia Water (GU25)

£1,081,595

32%

2

Beaconsfield (HP9)

£839,702

27%

3

Chalfont St. Giles (HP8)

£783,310

22%

4

Hartfield (TN7)

£697,535

20%

5

Gerrards Cross (SL9)

£719,765

19%

6

Radlett (WD7)

£693,525

19%

7

Guildford (GU5)

£733,978

19%

8

Henley-on-Thames (RG9)

£666,547

16%

9

Ascot (SL5)

£643,276

16%

10

Harpenden (AL5)

£649,553

15%

Source: Zoopla.co.uk, December 2013

 

News Headlines – Thursday 12th December 2013

Business/Economic
Lloyds Banking Group and RBS have been fined a total of £90m –the former for serious failings in its sales practices, and the latter to settle accusations that it breached US sanctions. The FCA was particularly critical of the structure of targets and bonus arrangements that involved sales people being potentially demoted with a cut in salary of up to 50% if they failed to hit targets.

Property
The number of first time buyers has surged by three quarters over the past year as a surge of activity in the housing market pushes prices even higher. Haart revealed that the number of the first time buyer registrations had risen 78.4% in November 2013 compared to the same month last year. Both Haart and Zoopla say that average house prices in the UK have risen over £10,000 during the year, soaring way head of growth in typical wages.

The energy minister has indicated that the Government could defy an official recommendation that it must meet its green energy targets for the 2020s. Michael Fallon described the report as merely ‘advice.’

Personal Finance
Families are having to spend almost £500 more a year on housing and energy bills than a decade ago, forcing cutbacks in other areas to make ends meet. The ONS found that last year families spent an average £68 a week on rent, energy bills, and other housing costs such and maintenance and repairs, up from £59.20 in 2002.

Recruitment
The treasury has confirmed maternity pay will be protected after it was revealed by David Cameron that it would be lumped in with the welfare spending due to be capped in next Spring’s Budget. Francis Elliott, Times, p10; Shadow childcare minister Lucy Powell is expected to say that employers wrongly see mothers as ‘scatty and clock watching,’ as they fail to understand that they have already done a day’s work before they leave home. Powell is to call for a revolution to overcome prejudices faced by working parents.

British Property Prices up £10,329 on Average in 2013

 

  • Average home in Britain now worth £244,289, a gain of £28.30 per day in 2013
  • London leads house price gains with average property in capital up £46,398
  • But property price growth is broad with numerous cities in the north doing well
  • Yorkshire and The Humber the only region to see average property values fall

 The value of the average British home has risen by £10,329 during 2013, according to property website Zoopla.co.uk. The average property value in Britain now stands at £244,289, up 4.4% over the year and a gain of £28.30 per day during 2013.

The effect of Help to Buy and low interest rates can also been seen in the figures which show increased demand driving up property values on the lower rungs of the property ladder. In England, semi-detached houses have seen the biggest increase in value, up 6.42% (£13,054) during 2013.

The gain in property values has been broadening out across the country as the recovery finally starts to be felt across the regions. Whilst London continues to surge ahead of the rest of the country with average property values rising £46,398 (10%) since this time last year, Scotland is now hot on the capital’s heels, enjoying a 6.85% increase during 2013. Overall, property prices have risen in ten of the eleven regions across Britain over 2013. Only Yorkshire and The Humber experienced a marginal fall (0.37%) in average house prices over the past 12 months.

And reinforcing the broadening effects of the recovery, northern cities now appear on the top ten list of best performing urban areas in 2013. The largest increase in house prices over the past year has been seen in Newcastle (10.05%). Other cities in the north making the top ten include Barnsley, Glasgow, Dundee, Aberdeen and York, all recording property price gains of over 6.5% during 2013. It is not all good news in the North, with the worst performing city in 2013 being Rotherham in Yorkshire, which suffered a small drop in average home values of 0.1% over the past 12 months. 

Lawrence Hall of Zoopla.co.uk said, “This year saw a host of new government initiatives that are now helping the property market to gain stability and set the foundations for a sustainable recovery. As a result 2013 has witnessed property price growth across most of the country and particularly at the entry level of the market. With confidence in the market increasing, 2014 could see further price growth as transaction levels pick up, construction continues and more property comes to the market.”

AVERAGE PROPERTY VALUES BY REGION

 Region

Avg. value

Dec 2013

Avg. value

Dec 2012

£ Change

 

% Change

London

£510,457

£464,059

£46,398

10.0%

Scotland

£171,690

£160,687

£11,003

6.9%

South West England

£243,437

£229,415

£14,022

6.1%

North East England

£168,795

£159,770

£9,025

5.7%

South East England

£310,973

£294,776

£16,197

5.5%

East of England

£260,018

£248,377

£11,641

4.7%

West Midlands

£182,569

£177,980

£4,589

2.6%

North West England

£164,149

£160,205

£3,944

2.5%

East Midlands

£170,953

£167,237

£3,716

2.2%

Wales

£160,346

£157,983

£2,363

1.50%

Yorkshire and The Humber

£148,507

£149,053

-£546

-0.4%

Source: Zoopla.co.uk, December 2013

BEST PERFORMING CITIES OF 2013

Rank

Location

Avg. value

Dec 2013

Avg. value

Dec 2012

£ Change

 

% Change

1

Newcastle

£183,057

£166,345

£16,712

10.1%

2

London

£510,457

£464,059

£46,398

10.0%

3

Cambridge

£344,881

£316,888

£27,993

8.8%

4

Barnsley

£122,769

£112,918

£9,851

8.7%

5

Cardiff

£203,939

£188,116

£15,823

8.4%

6

Glasgow

£160,935

£148,756

£12,179

8.2%

7

Dundee

£157,270

£146,262

£11,008

7.5%

8

Brighton

£293,927

£273,646

£20,281

7.4%

9

Aberdeen

£226,041

£210,729

£15,312

7.3%

10

York

£237,961

£223,304

£14,657

6.6%

Source: Zoopla.co.uk, December 2013

WORST PERFORMING CITIES OF 2013

Rank

Location

Avg. value

Dec 2013

Avg. value

Dec 2012

£ Change

 

% Change

1

Rotherham

£129,766

£129,896

-£130

-0.10%

2

Bolton

£136,680

£136,284

£396

0.29%

3

Colchester

£236,039

£233,762

£2,277

0.97%

4

Wolverhampton

£160,840

£158,964

£1,876

1.18%

5

Walsall

£151,204

£149,320

£1,884

1.26%

6

Hull

£114,684

£113,141

£1,543

1.36%

7

Swansea

£149,955

£147,570

£2,385

1.62%

8

Nottingham

£154,488

£151,954

£2,534

1.67%

9

Milton Keynes

£227,418

£223,362

£4,056

1.82%

10

Leicester

£177,720

£174,378

£3,342

1.92%

Source: Zoopla.co.uk, December 2013