PriceHubble’s latest study shows that in cities like Manchester and Newcastle, buying a home is still more affordable than renting, despite the rising housing affordability challenges across the UK.
The study focused on the financial implications of mortgage payments versus rental costs in the UK’s ten largest cities, observing a shift in affordability due to increased interest rates.
From 2021 to 2023, the average monthly mortgage payment as a percentage of gross earnings increased from 21% to 26%, while rental costs rose more modestly from 22% to 24%.
Sandra Jones, managing director of PriceHubble UK, said: “It might surprise some that rents are the more affordable option, as rental growth has been high over the last few years. However, despite some deterioration in rental affordability, strong earnings growth has helped keep rental affordability ratios more in check, creating a nuanced picture of the housing market.”
The study also highlights a significant affordability gap in cities like Oxford, Cambridge, and Brighton, where mortgage payments now far exceed the 30% affordability benchmark. In contrast, Manchester and Newcastle maintain lower ratios, making buying more feasible than renting.
Jones added: “Overall, the picture changed quickly from the end of 2022 when interest rates in the UK started rising significantly. Now it is changing again with interest rates expected to have peaked. Looking at the year ahead, a likely path in some markets would be either an equalising cost of rents versus mortgage or a reversal with mortgage becoming the relatively cheaper option again.”
