Cost of housing falls 17%

The cost of owning and running a home in the UK has fallen by 17% over the last 12 months, according to a new report from Halifax.

The research shows that average annual cost of housing fell from £8,766 to £7,298 between April 2008 and April 2009, while housing costs now account for 23% of average UK full-time earnings, down from 28% in 2008. This means that the cost of owning and running a home is at its lowest since 2006.

According to the report authors, this fall in housing expenses has been driven by a 47% decline in mortgage interest payments as a result of the base rate cuts by the Bank of England. The report shows that the average mortgage rate fell to 3.62% in April 2009 from 5.80% a year earlier.

However, mortgage interest payments were the only housing expense to experience an average fall. Electricity and gas charges, for example, have risen by 13% (£159) over the past year from £1,249 in April 2008 to £1,409 in April 2009. In addition, the cost of routine maintenance saw a large increase of 7%.

Suren Thiru, economist at Halifax, commented:

“With mortgage interest payments declining by almost half over the past year, the annual cost associated with owning and running a home in the UK has fallen significantly. Such a sizeable drop in the costs of running a home will help to ease the pressure on household disposable income, providing some welcome relief to homeowners.”

“Those living in London saw the biggest fall in housing costs over the past year, although the average annual expense of owning and running a home in the capital remains somewhat higher than elsewhere in the UK.”