Residents in Cambridge would be better off by up to £958,227 on average over 25 years if they bought instead of rented a typical property, according to research by Countryside.
Researchers compared the lifetime gain or loss of someone renting a property to the lifetime gain or loss of buying an average home. Because buyers will own an asset once they have paid off their mortgage, this is creating a remarkable divide between buyers and renters, leading to a property divide whose wealth will be substantially less than those buying over a 25 year period.
It may seem as though renting can be the cheaper option, but overtime, the property winners are those who buy and are left with an asset after 25 years. Looking at the costs of buying or renting an average Cambridge house priced at £450,426, buyers can gain over £918,000 after 25 years. This average house price reflects the latest figures published by the UK’s Valuation Office Agency under the category “all properties”.
The following table shows the lifetime difference between buying and renting an average house in Cambridge:-
|District||Monthly rent (initial)||Average Monthly Mortgage payment||Lifetime gain/ loss from renting||Lifetime gain/ loss from buying||Lifetime difference between renting/ buying|
|Cambridge||£ 1,150||£ 1,579||-£ 440,437||£ 517,790||£ 958,227|
David Everett, Managing Director of Countryside’s New Homes & Communities Central Region, said:
“Cambridge has a unique offering that few other cities can replicate, in that it gives residents the chance to enjoy contemporary living in one of England’s most historic cities. With excellent education and transport links, Cambridge also offers home buyers a good investment for the future. The outstanding Perse School lies within walking distance of our developments, along with the Cambridge Guided Busway providing the fastest connections to destinations including Cambridge railway station and the city centre”.
Buyers interested in purchasing a home in Cambridge have many options available with Countryside at both their Abode and Aura developments. The Hobson Collection is the latest release of homes at Abode; an exclusive development of just fifteen 1, 2 and 3 bedroom apartments, and 3 bedroom duplexes. All homes are set amid green open spaces and tree-lined avenues, surrounded by an extensive range of amenities in the wider Great Kneighton development. Local facilities include schools, shops, a library, sports pitches and a 120-acre country park. Prices range from £265,000 – £650,000.
Countryside has calculated the average rent using figures from the Government’s Valuation Office Agency and modelled how they are likely to increase in line with projected house price rises; it then modelled current and projected mortgage rates over a 25-year period using 25-year swap rates and current MFI bank margins. It used current house prices from Land Registry and modelled potential house price rises and capital gains using projections from the Office of Budgetary Responsibility for the next six years and a conservative long term house price annual growth rate of 3.7%.