The expense of owning and running a house has risen to its highest level in four years, according to new research by Halifax. The typical annual cost associated with owning and running a home in the UK stood at £9,393 in January 2012, the highest average annual total since January 2008 (£9,406). Over the past year, the cost of housing has risen by 2.7 per cent (£243) from £9,149 in January 2011. The increase, however, was less than the 3.6 per cent rise in consumer prices over the same period.
In monetary terms, the largest upward pressure on housing costs came from a £218 rise in gas and electricity bills, accounting for 89 per cent of the total rise. The increase in gas and electricity was more than seven times the rise in the cost of home and garden tools (+£31), the second biggest contributor to the increase in housing costs. Nine of the 11 housing expense categories tracked have risen in cost over the past year. In contrast, the most significant downward pressure on costs for homeowners came from mortgage payments, which fell by an average of £66.
Home running costs have risen across all UK regions in the last 12 months
Housing costs have risen across all UK regions since January 2011. Nonetheless, just two of the 12 regions – Northern Ireland and Wales – saw costs rise at a faster rate than consumer price inflation (3.6 per cent). Northern Ireland recorded the largest rise (4.6 per cent), followed by Wales (3.9 per cent).Those living in the East Midlands and London saw the smallest rises (both 1.9 per cent).
Unsurprisingly, total annual costs of owning and running a home are highest in London, at £11,843. This is 52 per cent (£4,051) higher than in Northern Ireland (£7,793), which has the lowest costs.
The typical annual mortgage payment has fallen by 23 per cent (-£1,036) over the past four years from £4,521 in January 2008 to £3,485 in January 2012. This decline reflects both the significant fall in mortgage rates and the reduction in house prices over the period.
The cost of each of the other 10 housing expenditure categories tracked has risen since 2008. Utility bills recorded the biggest increase (50 per cent), followed by home and garden tools (28 per cent) and home maintenance (20 per cent). Consumer prices, in general, increased by 15 per cent over the period.
Between January 2002 and January 2012, the average annual cost associated with owning and running a home rose by 55 per cent (£3,333) in the UK from £6,061 to £9,393. This is double the increase in consumer prices over the period (28 per cent).
The rise in the cost of housing since 2002 has been driven by a £1,227 increase in mortgage payments (notwithstanding the significant decline since 2008), a £979 rise in gas and electricity bills and a £502 increase in council tax payments. These increases combined accounted for 81 per cent of the total rise in housing costs.
Martin Ellis, housing economist at Halifax, commented: “The typical costs of owning and running a home has increased over the past year, returning the overall level to that of four years ago. This has happened despite the substantial fall in mortgage payments over recent years, as all the other costs associated with home ownership have risen. The prospect of declining consumer price inflation through much of 2012 may help the costs associated with running a home to ease as well, providing some welcome relief to homeowners.”
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