The cost of owning and running a home in the UK has declined by 6 per cent over the past two years, according to new research by Halifax.
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 (i.e. after allowing for retail price inflation), the cost of housing has fallen by 9 per cent.
Housing costs in the UK are now equivalent to 27 per cent of gross average full-time earnings, down from 30 per cent in 2008.
The fall in the cost of housing since 2008 has been driven by a 19 per cent (£881) decline in mortgage payments (interest and capital repayments), says Halifax.
The average mortgage rate paid by existing borrowers fell by 2.13 percentage points between April 2008 and April 2010 from 5.80 per cent to 3.67 per cent.
Regionally, London (£11,762) and the South East (£10,457) have the highest average annual costs of owning and running a home. Housing costs are lowest in Northern Ireland (£7,331).
Home owning and running costs as a percentage of gross average full-time earnings are lowest in London (24 per cent) 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 (31 per cent).
Over the past year, the average expenses associated with owning and running a home have increased by 1.3 per cent (£116). This is less than a third of the rise in retail prices (5.3 per cent).
Additional key findings:
- Mortgage payments account for the largest proportion of total housing expenses (41 per cent).
- Electricity and gas charges account for the second highest share after mortgage payments (15 per cent) followed by council tax charges and domestic rates (14 per cent).
- 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 per cent over the two years.
- Electricity and gas bills' proportion of housing costs increased from 13 per cent to 15 per cent as a result of the 10 per cent rise in such costs over the period.
"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,” said Suren Thiru, housing economist at Halifax.
“The drop in housing costs has helped to ease the strain on household's finances, providing some relief to homeowners during the economic downturn."
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