COMMENT
Housing Costs Go Through The Roof!

By Cliff D'Arcy
March 9, 2006

According to new research from the Halifax, the costs of owning and running a house rose by 7% in the 2004/05 tax year.

The UK's biggest mortgage lender -- the group has about two-ninths (22%) of all mortgage debt -- warned that this increase is 3½ times that recorded by CPI inflation, which rose a mere 1.9% in the year to March 2005. The Halifax goes on to say that, over the past three years, total housing costs have increased by a seventh (14%), far ahead of the 4.6% rise in general inflation over the same period.

Here are some key findings from the survey:

• Total annual housing costs leapt from £5,948 in 2003/04 to £6,366 in 2004/05, up 7%.
  
  
• Bigger mortgage interest bills fuelled much of this leap, up almost a fifth to £2,146, thanks to the average annual mortgage rate rising by one percentage point to 5.4%.
  
  
• On average, mortgage interest accounts for just over a third (34%) of the cost of owning and running a home in the UK. In London, it averages 39%, while in Northern Ireland it accounts for just over a quarter (27%) of housing costs.
  
  
• Although mortgage costs are expected to fall in the 2005/06 financial year, soaring fuel and council tax bills will more than offset this reduction. For example, British Gas raised its energy tariffs by 22% this month, and council tax bills are set to rise by an average of 4.5% next month.
  
  
• On average, housing costs for owner-occupiers account for almost a quarter (23%) of total household spending, which is a third more than we spend on essentials such as food and drink, clothing, education and healthcare.

What's more, the Halifax goes on to predict that council tax and utility bills combined will exceed mortgage repayments in 2005/06, which will be the first time that this has happened in four annual surveys. Hence, taxing and heating your home is now more expensive than actually buying it. Blimey!

As you'd expect, annual housing costs vary widely across the country, as the following table shows:

Ranking	Region	Average annual housing costs (£)
Most expensive	London	8,133
UK average	UK	6,366
Cheapest	North East	4,990

So, average owner-occupied housing costs in London are two-sevenths (28%) more than the national average, and almost two-thirds (63%) more expensive than living in the North East. Capital!

However, when you look at housing costs as a proportion of household income, the picture is far more uniform across the UK:

Ranking	Region	Housing costs/ gross household income (%)
Most expensive	East of England	18.6
UK average	UK	17.5
Cheapest	North East	16.0

So, life for owner-occupiers keeps getting more expensive, yet this isn't reflected in the government's inflation figures, which exclude home-owning costs. Do they think that we're all cave-dwellers or something?

Finally, if you're feeling the pinch from higher housing costs and rising taxes, then the following articles will help you to fight back against bigger bills:

• Twelve Ways To Cover Your TV Licence
• Tax Tricks For 2006!
• Ten Ways To Be A Smarter Homeowner!
• Fifteen Fabulous Money-Saving Tips!

So, what are you waiting for? Go bash your bills today!

More: Check out our new, improved Mortgage centre | Avoid interest with a 0% credit card!

Disclosure: Cliff owns shares in HBOS, parent company of the Halifax.