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Cost of Housing Soars 2006-03-09

Posted by clype in Money, Scotland.

The cost of owning and running a home rose by 7 per cent in the last financial year — more than three times the rate of inflation, research revealed yesterday.

The second consecutive above-inflation increase means the total costs of ‘housing’ over the past three years have soared 14 per cent — compared with a 4.6 per cent rise in inflation. The report, by ‘The Halifax’, said council tax bills and energy costs drove the increase and between them represented a larger chunk of costs than mortgage interest payments. Homeowners are likely to face even higher costs, because the figures, which cover the year to the end of 2005-03, do not include the recent round of gas, water and electricity bill rises. Ms.Caroline Spelman, who shadows the office of ‘The Deputy Prime Minister’ for the Conservative & Unionist Party, said:


‘Homeowners under “Mr.Blair and Mr.Brown” have been a prime target for stealth taxes. ‘”Labour” has been responsible for a barrage of taxes on property — cuts to “rights to buy”, freezing of” stamp duty thresholds”, and council tax — which has soared by 84 per cent across England [& Wales] since 1997.

‘These higher council bills particularly are hitting hard-working families and pensioners right in the pocket.’

The report said total annual housing costs increased from 5 948 GBP in 2003/2004 to 6 366 GBP in 2004/2005.

  • Higher mortgage interest payments were the biggest single contributory factor to the increase — rising to an average of 2 146 GBP.

However, lower mortgage rates in the current financial year will be offset by soaring fuel and council tax bills, with the cost of living estimated to rise by 3 per cent, ‘The Halifax’ said.

The UK’s biggest energy supplier, ‘British Gas’, increased gas and electricity tariffs by 22 per cent on 2006-03-01, and the UK’s council tax bills will go up by an average of 4.5 per cent in 2006-04 — more than twice the rate of inflation.

Council tax and utility bills will represent about 36 per cent of total housing costs in 2006/2007, ‘The Halifax’ said.

  • For the average UK homeowner, housing expenses take up 17.5 per cent of their income.

Council tax made up 16 per cent of the cost of owning a home last year — with tax rising to an average of 998 GBP, while utility bills accounted for 15 per cent of the increase.

The report said annual house-price inflation, at 5.5 per cent, was broadly unchanged from 2005-12 and 2006-01.

House prices are forecast to rise by 3 per cent this year, in line with retail price inflation. ‘The Halifax’s’ Chief Economist Mr.Martin Ellis said:

‘The combination of improving economic growth, low interest rates and high employment will continue to underpin a healthy level of housing demand over the next few months.’

He said a number of factors would prevent an acceleration in house price inflation.

‘The continuing high level of house prices in relation to earnings will curb the ability of many potential first-time buyers to enter the market.

‘Council tax and utility bill increases of well above inflation will also put downward pressure on householders’ finances.’

The weakening in the labour market would also temper demand, he said. Meanwhile, ‘The Halifax’ reported yesterday 2006-03-08 that house prices increased by 1.4 per cent in 2006-02 — more than offsetting the fall during 2006-01.



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