Rental vs Ownership

It’s been revealed that 56% of Brits want to buy their own home to give them a sense of security. However, according to our recent Home Insurance research, home ownership in the UK has dropped by 11% in the past 10 years with two in five Brits believing it’s harder for first-time buyers to get on the property ladder now than it was 20 years ago.

In actual fact, home ownership is dropping on a global scale, with 22 out of 36 developed countries – or 61% – seeing a decline in the past 10 years.

Here, we take a look at rental vs ownership trends around the world, and see how different countries compare…


Rental vs ownership

In the UK, the home ownership rate is 65%, while the rental rate is 35%.

With an average salary of over £54,000 and an average deposit of over £38,000 required to be able to afford to buy a home in the UK, it’s easy to see why renting is a more appealing option – particularly for young adults.

Plus, a study by The Nottingham Building Society found that most people in the UK start saving to buy a house at the age of 30, despite intending to start saving at 27. This is partly due to young people having other priorities, such as saving for a retirement fund, leading to young adults in the UK being dubbed ‘Generation Rent’.

While the current rental rate is 35%, it’s expected to overtake the home ownership rate by 2039.

In contrast, Romania, Croatia and Slovakia have the highest rates of home ownership, at 97%, 91% and 90% respectively.

Switzerland has the highest rental rate at 59%, followed by Germany at 49%, and Austria at 45%.


Ownership Change

Globally, most countries have seen a drop in home ownership in the past 10 years. And while some countries, such as Australia, have seen an increase, it’s tempered by the fact that the housing market has fallen in the past year.

In Australia, there’s been an 86% rise in home ownership over the past 10 years, however its current housing market is seeing its sharpest fall in the past 15 years.

Regarding specific cities, the bubble has also burst in Vancouver – in 2018, house prices dropped by a third. Conversely, Toronto’s prices are faring better, thanks to domestic and global demands.

Looking to the UK, London has always been an attractive prospect for wealthy foreign investors, however the uncertainty of Brexit means that many new-build developments are lying empty, and prices are falling.

In the UK overall, the home ownership rate was 76% back in 2008. The 11% drop to 65% in the past decade is the biggest decline globally, followed by Denmark and Iceland, which have both seen a drop of 9%.

Unaffordability goes some way in explaining the UK’s 11% drop: The Office for National Statistics reported that houses in the UK now cost nearly eight times the average earnings, which currently stands at around £29,000. 


Salary Vs Ownership

While you might assume that a higher average salary means a higher rate of home ownership, this isn’t necessarily the case.

In countries with a higher cost of living, such as Switzerland, the home ownership rate is lower than in countries with a lower cost of living – in Switzerland’s case, the average monthly salary is £4,253, but the home ownership rate is just 43%.

In the UK, the average monthly salary is £1,825. While this is much less than in Switzerland, home ownership is higher. Why is this?

The majority of everyday costs are higher in Switzerland than in the UK: From a meal at a casual restaurant (£20.59 vs £12), to a monthly gym membership (£66.77 vs £29.15), the clear indication is that there are other key factors at play when it comes to home ownership, and it isn’t just down to how much you earn.

When you look at home ownership vs renting a home in the UK, it’s actually cheaper to buy than rent: According to a study by Santander Mortgages, Brits could stand to make a saving of over £2,000 per year by purchasing a home, rather than renting it but the biggest challenge is putting together the large sum needed for a mortgage deposit

The average house price in the UK has been gradually falling since August 2018, however it started to pick up again in April 2019, and now stands at £228,903.


Countries Vs Salary

The cost per square metre of a home is closely linked with salaries, with the average monthly salary in most countries being around half the cost of one square metre of a home.

The United States bucks this trend: Over there, the average monthly salary is one and a half times the cost of one square metre, making it the most affordable place to buy a home.

In the UK, the average monthly salary is £1,825, while the average cost per square meter is almost double that, at £3,585. This disparity has resulted in Brits having the smallest homes in Europe, with an average of 71.9 square metres.

However, it hasn’t always been this way: According to Which?*, British homes are now 20% smaller than they were in the 1970s. Back then, homes hit a peak of 83.3 square metres, with living rooms shrinking the most dramatically in more recent years.

UK homes also have less bedrooms now, with an average of 2.95, which is the fewest in the past 90 years. 


Countries Vs Salary

In the UK, the average cost of renting per month is £877, which is less than half of the average monthly salary. For Brits, this can make renting a much more appealing option, especially when you consider the rising cost of living and changing lifestyle choices.

British renters have often been at the mercy of landlords and letting agents charging additional fees to cover things like admin costs. However, a new ruling in June 2019 means that most fees are now banned, making it a little easier for people to afford renting.


Countries Vs Rent

As mentioned, the UK’s average monthly rental cost is roughly half the average monthly salary – or 48%.

How does this figure align with affordability? A ‘budget rule’ of 50/20/30 was popularized by United States Senator Elizabeth Warren in her book ‘All Your Worth: The Ultimate Lifetime Money Plan’. This basically means that you should be spending 50% of your after-tax income on ‘needs’, 30% of it on ‘wants’ and saving 20% of it.

While this seems like a sensible approach to budgeting, it’s worth noting that the average Brit spending half of their salary on rent means that the rest of their ‘needs’, i.e. bills and food, will have to come out of the money allocated to ‘wants’ and savings.

What about other countries? 59% of people living in Switzerland are renting homes, whereas Malta has a rental rate of just 19%: This is perhaps unsurprising, when you consider that the average monthly salary is £1,018, and the average monthly rental cost is £911 – a huge 89% of people’s earnings. 


Countries Vs Affordability

Relatively speaking, the most expensive country to buy property in is the Czech Republic, where one square metre is equivalent to three months’ salary. In fact, a study by Deloitte found that Czechs need to save for almost 12 years to be able to purchase a home.

France is just behind the Czech Republic, with one square metre costing just under three times the monthly salary.

Again, the most affordable country to purchase a home, in relative terms, is the United States: The average monthly salary is £2,525, and one square metre costs £1,791. 

In the UK, the average cost per square metre is £3,585, which is equivalent to two months’ salary – again, this underlines that buying a home for many Brits isn’t an affordable option, and is often unattainable.

*Information taken from LABC Warranty research via


Swinton Insurance have analysed 10 years of home ownership and rental rate data and combined it with the latest data for the average cost of renting per month, the average price of home per square metre, and the average monthly NET salary (after tax), to reveal which factors are impacting the property trends for each country. All figures converted from EUR to GBP using live market rates on – calculated 20th August 2019