Countries with the largest real estate gap between buying and renting

Real estate decisions can vary depending on where in the world you are buying or renting a home. (Getty)

Hot real estate markets add fuel to the debate over whether to buy or rent a home.

There have been a number of attempts to calculate the numbers. Which one makes the most sense may depend on where in the world you plan to live.

New research from Compare the market looked at average house prices and rents across OECD countries to see which countries had the biggest gap between mortgage payments and renting.

Canada has one of the largest gaps between renting and buying. The report found that mortgage payments are 32.6% more expensive than the rent for a three-bedroom house.

But there are nine countries with even bigger gaps. Luxembourg has the largest gap between mortgage and rent at 51.1%, while being the most expensive for both in the world.

“This means that with an average rent of US$3,017, the average monthly mortgage payment is estimated at US$4,558,” the report read.

“Luxembourg is renowned for its high cost of living, which is clearly reflected in the cost of real estate and rent.”

Also see: The latest real estate news for home prices, mortgage rates, markets, luxury properties and more from Yahoo Finance Canada.

Latvia has the second largest gap with 42.5%. However, the prices of both are significantly lower. The average rent is only $582 per month and the mortgage payments are $830.

Slovakia has the third largest gap (42.3%), largely due to rising house prices. But each option is also cheaper with an average rent of $771 and mortgage payments of $1,098.

There are only two countries where buying is cheaper than renting. The average mortgage payment of $1,258 in Finland is 2.1% cheaper than a rent of $1,285.

The other is Italy. Mortgage payments of $997 are slightly lower (0.9%) compared to rent of $1,006.

Jessy Bains is a Senior Reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

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