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Cost of owning a home on the rise

The cost of owning and running a home is at its highest level since 2008, despite a 23% drop in average mortgage payments.

Nia Williams, 10 April, 2012

The annual Halifax review of the cost of owning and running a home shows 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% (£243) from £9,149 in January 2011. The increase, however, was less than the 3.6% 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% 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.

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%).

Those living in the East Midlands and London saw the smallest rises (both 1.9%).

Unsurprisingly, total annual costs of owning and running a home are highest in London, at £11,843. This is 52% (£4,051) higher than in Northern Ireland (£7,793), which has the lowest costs.

The typical annual mortgage payment has fallen by 23% (-£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%), followed by home and garden tools (28%) and home maintenance (20%). Consumer prices, in general, increased by 15% over the period.

Martin Ellis, housing economist at Halifax, said: "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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