Getting on the property ladder may be a challenge, but most of those who have managed it currently enjoy much lower monthly costs than people who are renting.
People who rent their homes rather than buying pay nearly £100 a month more on average than mortgage holders, according to new research by Halifax.
The bank says that the cost associated with buying a home in the UK is typically 14% lower than renting a property - although of course to buy a property you need to put down a hefty deposit in the first place.
The average monthly costs associated with buying a three bedroom house in the UK stood at £608 in March 2011, £98 lower than the average monthly rent paid on the same property type of £706. Three years ago, the average cost of buying was 43% more than the typical rent paid.
Those who are lucky enough own their homes also have the advantage that their money is going towards an asset that they own, whereas if you rent, you are paying off your landlord's mortgage instead.
Why is owning cheaper?
The Bank of England base rate has been at a record low of 0.5% for over two years now, and as a result, mortgage costs are extremely low. Halifax says that the mortgage rate for a new borrower has fallen to an average of 3.59% from 5.82% in March 2008, resulting in a reduction in average monthly mortgage payments of 39%.
Suren Thiru, housing economist at Halifax, said; "The typical monthly mortgage payment has declined by over a third since 2008 as a consequence of falling mortgage rates and lower house prices. As such, the fall in the cost of buying a property compared to the average rent paid by tenants has been significant. Such a marked decline in mortgage costs has improved affordability for those able to enter the market as well as helping to ease the pressure on existing homeowners' disposable income.
"Although the current trade-off between buying and renting is expected to narrow when interest rates start to rise again, the long-term benefits associated with investing in bricks and mortar are likely to ensure that buying will continue to be viewed favourably by many."
The good news for those trying to get on the property ladder is that latest figures from Hometrack seem to suggest that it could become even cheaper to buy over the next few months.
A spokesman for Hometrack said; "The early signs of a change in market dynamics can be seen in the proportion of the asking price being achieved. The proportion of asking price achieved increased over February and March as levels of demand grew, but over April this measure has fallen back slightly to 92.6% suggesting that while agents are still achieving sales, pricing levels are starting to come under pressure as would-be purchasers are presented with increased choice as supply grows.
"Over the last two months the supply of homes for sale has grown faster than new applicants - new supply up 10.7% and demand up 7%. We expect this gap to widen further in the coming months."
If the supply of property ends up being much greater than demand, then sellers may be forced to reduce prices to ensure a sale, making it easier to pick up a bargain.
Renting has positives too
Even if property prices do fall, for many people owning a home is still out of reach. But it's not all bad news if you do have to rent. First and foremost, the landlord is responsible for maintenance and repairs, so if the boiler suddenly packs up, it won't be you who has to fork out thousands to replace it.
You can also move much more easily. Most contracts only lock you in for six months, or sometimes less, so if you don't like your home, you can move on relatively painlessly. In contrast, if you own your home and want to move, it can take many weeks to sell and the conveyancing process can often be extremely stressful, especially if it emerges that major work is needed to your property before anyone will buy.
While there are fees and a deposit to pay if you rent, these pale into insignificance compared to the size of the deposit you will need to find to buy a property. You will usually need to save at least 10% of the property's value to secure a mortgage, and much more than this if you want a really competitive mortgage deal.
Transaction costs including stamp duty and the fees associated with home purchase also add to the overall costs of buying a property. The average stamp duty bill for a three bedroom house was £1,639 in March 2011, although first-time buyers are exempt on purchases below £250,000.
And remember, even though buying is cheaper now, when interest rates do start to rise and mortgage costs go up, the picture won't be look quite so rosy financially for homeowners.
By Melanie Wright, financial journalist for moneysupermarket.com
