Housing costs currently account for 23% of average UK full-time earnings, down from 28% in 2008. The expense of owning and running a home is at its lowest since 2006.
The significant fall in housing expenses over the past year was driven by a 47% decline in mortgage interest payments. The average mortgage rate2 fell to 3.62% in April 2009 from 5.80% a year earlier.
Mortgage interest payments were the only housing expense category to experience a fall between April 2008 and April 2009. The largest upward pressure on housing costs came from electricity and gas charges, which have risen by 13% (£159) over the past year from £1,249 in April 2008 to £1,409 in April 2009. Routine maintenance saw the next largest increase (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."
Other Key Findings:
Housing costs
All UK regions recorded a double digit decline in housing costs over the past year. The cost of owning and running a home in London fell by 21%, the largest of any UK region. The South East (-19%) recorded the second biggest decline followed by the East of England (-18%). Wales and Northern Ireland saw the smallest falls in housing costs (both -13%).
Annual housing costs are highest in London. The annual expense of owning and running a home is highest in the capital. Average annual housing costs in London were £9,180 in April 2009, 26% higher than the UK average of £7,298. The North East had the lowest average housing costs (£6,106), 16% below the national average.
Share of total housing costs by category Mortgage interest payments share of total housing costs drops significantly. Due to the 47% decline in mortgage interest payments over the past year, mortgage payments' share of total housing costs declined from 43% in April 2008 to 27% in April 2009. At the other end of the scale, electricity and gas bills' proportion of housing costs rose from 14% to 19% as a result of the 13% rise in such costs over the year.
But mortgage payments still account for the largest proportion of housing expenses. Mortgage interest payments remain the largest component of the cost of owning and running a home, accounting for 27% of total costs. Electricity and gas charges (19%) account for the second highest share followed by council tax charges and domestic rates (17%).
