Does it still make sense to buy a house?

Every year, thousands of people across the UK receive a questionnaire. It asks for their views on everything from immigration to sexuality, and forms the backbone of the British Social Attitudes survey. For more than four decades, these reports have provided an insight into how the nation thinks.

A couple of years ago, an interesting question cropped up. If you were talking to a pair of newly-weds, would you tell them to buy a home as soon as possible? For baby boomers, the answer was a resounding ‘yes’. Almost 70 per cent of respondents born between 1946 and 1964 would suggest buying a property pronto. 

The survey chimes with my own experience. I’m 29 and several of my friends have climbed on to the property ladder – usually with help from parents or grandparents. For those lucky enough to have the means, the message is clear: buy a house as soon as you can.

But what if that is bad advice?

I have spent much of my twenties renting in London. I’ve been turfed out by landlords, stung by rising rents and – for reasons I can’t quite recall – ended up in a flat where you had to top up the electricity every month in a dungeon beneath the building. The security and comfort of home ownership are not lost on me. 

The financial logic needs closer attention, though. It is easy to assume that paying rent is like throwing money out of the window, while property is the ultimate sensible investment. But this isn’t necessarily the case.

When you compare buying and renting, there are several things to consider, including:

House prices are already making people nervous. When I was born, the average house in England and Wales cost £51,126; today, it costs £287,949.

Since the Covid-19 pandemic, however, prices have stagnated – and in London they have actually started to fall. Mortgage rates have also been climbing, making monthly repayments more expensive. On the flip side, rents are high and competition for rental properties is fierce.

Juggling these different factors is not easy. So I went back to 2018 and asked a simple question: what would have happened to two identical pots of money if one person had bought a home and the other had rented instead?

Scenario 1: A London flat 

Two friends are looking for flats in drizzly London in January 2018. Neither has bought a property before and both have the same amount of money saved. 

One of them buys a flat in the capital for £441,502 – the average price at the time, based on the government’s UK House Price Index. He pays a 25 per cent deposit, conveyancing fees and stamp duty, which is reduced because he is a first-time buyer. This amounts to just under £120,000 in total. 

He takes out a mortgage to cover the rest of the purchase, initially fixing for two years. He remortgages every two years using prevailing mortgage rates. 

The other friend chooses to rent instead. Rather than spending her £120,000 on a deposit, stamp duty and legal fees, she invests it in the global stock market and leaves it there.

So who made the better decision?

By June 2026, our buyer’s flat is worth about £10,000 less than he paid for it in 2018. He has not stood still, however: years of mortgage repayments mean he has roughly £192,000 of equity (I’ve calculated this by taking the property’s price in June 2026 and deducting his remaining mortgage).

The renter’s money has taken a very different path. Her £120,000 investment in a global equity index fund has grown to about £319,000. 

There is one final piece to the puzzle. Between 2018 and 2026, the average rent for a London flat was higher than the buyer’s mortgage payments – even after interest rates went up. If the buyer saved that monthly difference, he would have accumulated another £23,700, before any investment growth.

It is not enough to close the gap, though. By summer 2026, the renter is still around £100,000 better off. This is a striking difference. What went wrong for the buyer?