First-time buyers benefit from house price crunch

House price falls make it cheaper for first-time buyers with big deposits to buy a home than rent in most UK places, research has showed.

London and East Anglia are the only regions where renting is still less expensive than buying for people with a 25% deposit, according to high street bank Abbey.

The group said the average price of a typical first-time buyer property, like a flat or terraced house, has fallen by 12.6% during the past year to average £111,628.

At the same time, the Bank of England Base rate has dropped from 5.25% in February last year to a record low of 1%.

This has made mortgage rates for people with large deposits increasingly affordable.

The research found that outside of London and East Anglia, the average monthly rent on a typical first-time buyer property is £429.

But those buying a similar home with a 25% deposit would pay an average of £378 a month, based on a mortgage rate of 4.19%.

The North West offered the biggest savings to buyers over renters, with it costing around £77 a month less to buy a property in the region than to rent.

Wales was second best for buyers, with savings of around £68 a month over renters.

But it is still significantly cheaper for people to rent a home rather than buy one in London

A typical first-time buyer flat in the capital costs £275,566, giving monthly mortgage repayments of £1,113 once a 25% deposit has been taken into account.

Renting a similar property in the capital would cost around £650 a month, giving a monthly saving of £463.

The difference is smaller in East Anglia, with first-time buyers able to save around £5 a month by renting a property rather than buying it.

Nici Audhlam-Gardiner, director of Abbey Mortgages, said: "The tide is turning in favour of first-time buyers.

"With property prices falling and competitive mortgage offerings now available, those who have built a significant deposit will be able to reap the benefits across most of the country with lower monthly outgoings."