Falling house prices and rising rents mean that first-time buyers are better off entering the property market than continuing to rent long term, according to new research.

Abbey has calculated that those who rent over 25 years lose on average £10,500 compared with those who buy a home. In the south east of England, the loss could amount to £60,000.

But with many nervous buyers unwilling to commit to a purchase, an area of the property market witnessing some of the most interest is buy-to-let investment.

Strong demand from tenants has whetted investor appetite for rental property, in spite of falling house values. According to the most recent Council for Mortgage Lenders analysis, buy-to-let loans have increased steadily over the past two years and now account for more than 10 per cent of the total mortgage market.

Not all locations in the UK provide the same opportunities for homebuyers, however. In Northern Ireland, specifically Belfast, estate agents estimate that buyers would lose out over the long term.

The figures are based on individuals paying off a 90 per cent loan-to-value repayment mortgage over 25 years at a rate of 6.64 per cent. Those able to secure greater levels of equity and a cheaper deal could save even more money.

There are, however, a raft of deals at higher rates. Just this week, two-year fixed mortgage rates topped 7 per cent. Anyone on a rate that exceeds 6.64 per cent will feel less of a benefit from buying their own home.

The rent vs buy index from Abbey also does not take into account stamp duty or legal fees. However, it does include maintenance costs and mortgage fees.

The gap between the cost benefits of buying a home over renting narrowed in 2007 as rental costs decreased. But as house prices fell and rents increased, this trend has reversed.

For renting to become a more cost-efficient option than buying a house, Abbey calculated that house prices would need to rise by 2.5 per cent, with all other factors remaining the same.

So Abbey said it expects the differential to become wider in favour of buying a house as house prices continue to fall.

In spite of these facts, demand from tenants for rental accommodation is on the up. Analysts attribute this in part to tighter lending criteria, which has made mortgages harder to obtain for those people seeking to enter the housing market.

This week, Woolwich's First Start deal, the last mainstream offer of a 100 per cent mortgage, was removed from the market. First-time buyers now require a larger deposit in order to obtain a mortgage and many are concerned that the effects of falling house prices and rising mortgage rates could result in negative equity.

MoneyExpert.com says tenants are in a better position to ride out the financial pressures of rising household bills than homeowners. "They don't have to remortgage, won't suffer equity losses and their expenditure on basic commodities is lower too," said director Sean Gardner.

Mortgage brokers also admitted that buy-to-let investors face the same problems as first-time buyers: higher rates and tighter lending restrictions.

For anyone considering entering the market, one of the best rates currently available is 6.29 per cent from Chelsea Building Society, which requires a 30 per cent deposit. In June, Bradford & Bingley (LSE: BB.L - news) , the UK's biggest buy-to-let lender, withdrew its entire range of fixed and variable buy-to-let loans.

According to Louise Cuming, head of mortgages at money-supermarket.com, the number of products available to buy-to-let investors with a deposit of less than 15 per cent has dropped from 259 in June last year tojust 12.