Buying a home in Scotland is 6% cheaper than renting

Buying a three-bedroom home in Scotland is 6% cheaper than renting, according to research by Bank of Scotland.

The typical monthly cost of buying a three bedroom house in Scotland was £510 in December 2011:, which was 6% (or £30) lower than the average monthly rent of £540 paid on the same property type.

The current cost of buying in Scotland, at £510 per month, is 15% lower than the UK average (£600).

This represents a significant turnaround compared with three years ago when the average cost of buying was 47% higher than the average rent paid.

Home buying costs have fallen by more than a quarter (£330) since 2008, driven by a decline in the average monthly mortgage payment of 37% (£250) due to the marked fall in mortgage rates and house prices.

The mortgage rate for a new borrower has been reduced to an average of 3.63% in 2011 from 5.75% in 2008, while the average house price has dropped by 17% over the same period.

Over the past year, buying costs have dropped by 6% while the typical cost of renting has risen by 1%, continuing the trends seen in 2010.

Nitesh Patel, housing economist at Bank of Scotland, commented: "The affordability gains for buyers in Scotland relative to renters in the last three years have been significant, albeit less than the improvement in buyer affordability across the UK. The average mortgage payment has fallen over recent years as a result of falling house prices and mortgage rates.

"Nonetheless, despite the improvement in the relative affordability of buying a home, the number of purchasers has continued to fall due to the ongoing challenges in raising a deposit and the considerable uncertainty over the prospects for the economy, which have severely constrained housing demand."