Halifax

Annual cost of owning and running a home rises by £179

03 April 2013

  • Water bills 5.6% higher; electricity & gas up 4.2%
  • Electricity & gas bills up £626 a year since 2008

The annual expense of owning and running a house has increased by £179 over the past year, according to new research by Halifax.

The typical annual cost associated with owning and running a home in the UK has risen by 1.9% from £9,411 in 2012 to £9,5901. The increase was, however, less than the 2.7% rise in consumer prices over the same period.

This was the third successive annual increase in the cost of owning a home following the decline recorded between 2008 and 2010, which was driven by the reduction in mortgage rates during this period.

Overall, the average annual costs of owning and running a home are now 2.0% (£184) higher than five years' ago. This increase is significantly lower than the 18% increase in overall consumer prices since 2008.

Water and fuel bills have risen most in percentage terms
Water bills have increased by an average 5.6% (£27) over the past year. The next biggest percentage rise was in electricity and gas bills, which increased by an average of 4.2% (£70). Six of the 11 housing expense categories tracked have risen in cost over the past year.

Home running costs have risen across all UK regions in the last 12 months
Housing costs have risen in all UK regions in the past year.  Nonetheless, only two regions – Northern Ireland (4.8%) and Wales (4.1%) – saw costs rise at a faster rate than consumer price inflation (3.3%). Those living in the East Midlands (2.0%) and London (2.0%) saw the smallest rises.

Total annual costs of owning and running a home are highest in London, at £12,094. This is 26% (£2,504) above the UK average and 52% (£4,124) higher than in Northern Ireland (£7,970), which has the lowest costs.

2008-2013
Mortgage payments have fallen by nearly a quarter since 2008…
The average annual mortgage payment has fallen by £950 (21%) over the past five years from £4,521 in 2008 to £3,571 in 2013. This decline largely reflects the fall in mortgage rates since 2008.

…offsetting most of the rising cost of all other housing expense categories…
In contrast, the cost of each of the other 10 housing expenditure categories tracked has risen since 2008. Electricity and gas bills have risen most (up by 57%, or £626 a year), followed by home and garden tools (25%) and water supply and miscellaneous dwelling services (22%).

…reducing mortgage payments' share of total housing costs…
As a result, mortgage payments have dropped significantly as a share of total housing costs since 2008 from 48% to 37% in 2013. In contrast, the share of electricity and gas bills has risen from 12% to 18%.   

…although they remain the biggest single component
Nonetheless, mortgage payments remain the largest single component of housing expenses (37%). Electricity and gas charges account for the second highest share (18%), followed by council tax payments (14%).


Martin Ellis, housing economist at Halifax, comments:
"The typical costs of owning and running a home have again increased slightly over the past year, although this rise was below the general increase in the cost of living.

"Overall, the cost of owning a home has increased by 2% over the past five years, representing a significant decline in real terms. Lower mortgage payments have largely offset increases in other items of housing-related expenditure, such as the substantial rises in electricity and gas bills."

Read full press release