Average cost of owning and running a property in the UK falls, research shows

Between April 2008 and April 2010, the average annual cost associated with owning and running a home fell by £544 from £9,564 to £9,020. In real terms, after allowing for retail price inflation, the cost of housing has fallen by 9%. Housing costs in the UK are now equivalent to 27% of gross average full time earnings, down from 30% in 2008, the latest review from the Halifax shows.
 
It is based on costs including mortgage payments, council tax, spending on maintenance and repairs, water supply, electricity, gas and other fuels, household appliances, tools and equipment, goods and services for routine household maintenance, telephone accounts, toiletries and household insurance.
 
The fall in the cost of housing since 2008 has been driven by a 19% (£881) decline in mortgage payments, the research shows. The average mortgage rate paid by existing borrowers fell by 2.13% between April 2008 and April 2010 from 5.80% to 3.67%.
 
Regionally, London has the highest annual costs at £11,762 and the South East at £10,457. Housing costs are lowest in Northern Ireland at £7,331.
 
Home owning and running costs as a percentage of gross average full time earnings are lowest in London at 24% despite the capital having the highest absolute costs. However, with the level of earnings varying considerably across the capital, housing costs will be much less affordable for a significant number of households. Housing costs are highest in relation to earnings in the East of England at 31%.
 
‘Over the last two years, the cost associated with owning and running a home in the UK has fallen, entirely as a consequence of reduced mortgage payments. The drop in housing costs has helped to ease the strain on household’s finances, providing some relief to homeowners during the economic downturn,’ said Suren Thiru, housing economist at Halifax.
 
The report also shows that mortgage payments account for the largest proportion of total housing expenses, 41%, electricity and gas charges account for the second highest share after mortgage payments at 15%, followed by council tax charges and domestic rates at 14%.
 
Nine of the eleven housing costs categories analysed recorded above inflation increases between April 2008 and April 2010. The cost of home maintenance, electricity and gas charges and household appliances all rose by 10% over the two years.
 
Electricity and gas bills’ proportion of housing costs increased from 13% to 15% as a result of the 10% rise in such costs over the period.