IT is still generally cheaper to buy property than rent despite rising house prices and increases in interest rates, says high street bank Abbey.

But the difference between buying and renting has narrowed sharply since last year and in some areas of the country it is now cheaper to rent than buy.

Abbey says the average cost of buying a home over 25 years is now £437,925, while renting a similar property over the same period would cost £443,736, making buying £5,811 or 1.3 per cent cheaper.

But the figure has fallen sharply from last year when it was more than £24,000 or six per cent cheaper to buy.

Abbey blames the rising cost of property and five increases in the base rate since August last year. But it added even if renting were cheaper over 25 years, people who own their home benefit from any increase in its value.

Soaring prices in Northern Ireland mean it is now 49 per cent or £180,717 more expensive to buy than rent, while in Wales buying is 15 per cent more expensive. In the North West it is 13 per cent more.

In the West Midlands, buying and renting cost broadly the same while in Yorkshire and London it is only one per cent cheaper to rent than to buy.

East Scotland is the cheapest place to buy compared with renting. Homeowners save £117,600 or 21 per cent over 25 years.

It is also 18 per cent cheaper to buy in the North than to rent, while in the South East, homeowners save around 17 per cent or £92,853 over renting.

Branch manager of Connells, Southbourne, Colette Chester said: "A mortgage costs less than renting the same property locally. For instance, I'm paying £590 per month for the flat I have bought. If I were renting it, it would cost me £750 a month. A friend bought a buy-to-let and still has to pay £90 a month towards the mortgage. The credit crunch has affected the market. September and October are usually busy with November being quiet but this year the reverse is true. I think the rate will drop at the beginning of next year."

Lettings manager of Goadsby, Bournemouth, Mark Sanderson, said: "Our lettings department is experiencing a Christmas rush with lots of properties from studio flats to five-bedroom detached houses coming to the market. With the current uncertainty lots of vendors are becoming landlords to sit it out' over the next six months.

"The sales department is having to work harder and smarter with applicants looking. There is a definite trend of home owners putting property up with sales and lettings to see which comes first. We have a list of properties to suit every type of tenant. If anything we're now busier than normal."

He added: "In general renting in the short-term makes sense for many people whether first-time buyers saving up for a deposit, sellers with no new property to move into or people in a position to rent long-term. Comparatively high-end properties offer the best value for money with tenants being able to rent £500,000 homes for around £1,200 a month but one-bedroom flats usually rent for around £550, two-bedroom flats start at £625 and three bedroom flats start at £850."