Buying a home is still cheaper than renting

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A record low number of homes for sale has helped push the average price of a UK property to more than £204,000, but buying is still cheaper than renting, Halifax has reported.

The typical price of a home increased to £204,674 in the three months to August - a nine per cent increase on this time last year and a three per cent jump on the preceding three months.

A shortage of second-hand properties on the market combined with the economic recovery and low mortgage rates are behind the demand, Halifax said.

It cited a report from the Royal Institution of Chartered Surveyors which said the stock of homes available for sale fell again in July to another record low.

But the average monthly costs associated with buying a three bedroom house in the UK for a first-time buyer remain £56 lower than the typical monthly rent.

Halifax housing economist Martin Ellis said: “The underlying pace of house price growth is strong.

“The shortage of second-hand properties for sale on the market is resulting in upward pressure on house prices. At the same time, economic recovery, real earnings growth and very low mortgage rates are supporting housing demand.

“Strengthening demand and highly constrained supply are likely to mean that house price growth continues to be robust in the short-term.”

Halifax pointed to recent figures from the Bank of England showing that mortgage approvals for house purchases increased by three per cent in July to the highest level since February last year.

Approvals in the three months to July were five per cent higher than in the preceding three months and four per cent higher than in the same three months last year.