Is it cheaper to rent or buy?
Image source: Getty Images  Its no secret that the UK is going through a bit of a housing boom. And with predictions that both prices and the number of transactions are set to rise still further, it seems that the bubbles unlikely to burst any time soon. But one side effect of sky-high house prices is that its now cheaper to rent than buy property. Plot your path towards financial freedom with our Heros Journey tool! MyWalletHero is here to help you learn about taking control of your money, whether thats paying off debt, working towards a short-term money goal, or investing for your future. This tool can help you understand the next steps on your journey  simply choose a goal that best describes your current interests to get started. Its 71 cheaper every month for first-time buyers to rent instead of buy. That figure comes from an assessment of the housing market by estate agent Hamptons. Hamptons data reveals that a first-time buyer with a 10% deposit could expect to pay 1,054 a month on rent compared to 1,125 on a mortgage. The stats defy the usual trend and its the first time in five years that its been cheaper to rent than buy a home. Its a shift seen across most of the UK, and its currently cheaper to rent in seven out of 11 regions. The only areas where it still remains better to buy are the North East, the North West, Yorkshire and Humber, and Scotland. A combination of reasons brought about by the pandemic means its now more cost-effective to rent than buy. One of the key reasons is the lack of housing to meet demand. City dwellers are upping sticks and swapping urban life for more space and rural solitude. That demand has helped bolster house prices and fuel tough competition as buyers snap up homes that do come onto the market. Unsurprisingly, rent decreases in London have also played a large part in broadening the gap between renting and buying. The data from Hamptons confirms that first-time buyers in London have gone from being 123 per month better off by buying to spending 251 less on rent in May 2021. Another reason is that mortgage rates have also increased. This means repayments have crept up, particularly for those with a 95% LTV ratio, where monthly rent would cost 19% less compared to buying. The rise in house prices hasnt meant a cut in rent. In fact, the average rental cost has actually increased by 4% from last year and is up 0.1% in May from April, according to data from HomeLet. That year-on-year increase rises to 6.4% if you strip out London rental costs. The increase brings the average cost of rent to 997 per month in the UK. And while rents in London have fallen, theyre still 85% higher compared to the rest of the UK. HomeLets rental index shows that the North East is the cheapest place to rent as of May this year. There, you can expect to pay 560 per month, which is an annual increase of 6.3%. The second cheapest place to rent is Northern Ireland. Here monthly rent will set you back an average of 678, a 4% year-on-year rise. Thats closely followed by Wales, where the average rent is 698, a 7.7% increase from last year. At this exact moment in time, statistics show that renting is cheaper than buying. But, that doesnt mean its better than buying in the long run. As were constantly reminded, were living in unprecedented times. And whats happening in the housing market could simply be a knee-jerk reaction to events. In normal times, it almost always makes more financial sense to buy your own home if you have the means (and desire) to do so. Renting might save you some cash right now, but paying into a mortgage has long-term benefits. So, if youre toying with the idea of becoming a homeowner, take a look at the best place to buy your first home. Yes No  4 iron-clad rules for saving money on everything Our Editor Sam Robson has been on a personal cost-cutting mission for years  and its time to share his wisdom. Check out his choicest saving tips and tricks in this free report, Sams 4 Iron-Clad Rules For Saving Money On Everything. Just enter your email below for instant access to your free copy. Click here!