The expense of owning and running a house in Scotland has risen to its highest level in over a decade, according to new research by Bank of Scotland. The typical annual cost associated with owning and running a home in Scotland stood at £8,523 in January 2012, the highest average annual total since records began in 2002. Over the past year, the cost of housing has risen by 3.1% (£257) from £8,266 in January 2011; slightly ahead of the 2.7% increase for the UK as a whole. The increase, however, was less than the 3.6% rise in consumer prices over the same period.
The increase in housing costs over the past year largely reflects rising utility bills
In monetary terms, the largest upward pressure on housing costs came from a £238 rise in gas and electricity bills, accounting for 92% of the total rise. The increase in gas and electricity bills was more than nine times the rise in the cost of home and garden tools (+£25), the second biggest contributor to the increase in housing costs. Eight of the 11 housing expense categories tracked have risen in cost over the past year. In contrast, the most significant downward pressure on costs for homeowners came from mortgage payments, which fell by an average of £58.
Scotland sees the third biggest rise in housing costs over the past year
Home running costs have risen across all UK regions in the last 12 months with Scotland recording the third biggest increase (3.1%). Nonetheless, just two parts of the UK - Northern Ireland and Wales - saw costs rise at a faster rate than consumer price inflation (3.6%). Northern Ireland recorded the largest rise (4.6%), followed by Wales (3.9%).Those living in the East Midlands and London saw the smallest increases (both 1.9%).
|Cost of Owning and Running a House by UK Region, Jan 2008- Jan 2012
||Jan 2008 £s
||Jan 2011 £s
||Jan 2012 £s
||1 year % change
||4 year % change
|Northern Ireland||7,316||7,793 ||7,793 ||4.6% ||6.5%|
|Wales ||7,459||7,603||7,899 ||3.9%||5.9%|
|Scotland||8,461 ||8,266 ||8,523 ||3.1% || 0.7%|
|Yorkshire & the Humber ||8,033 ||8,078||8,320||3.0% ||3.6%|
|North East||7,718 ||7,752||7,983 ||3.0% ||3.4%|
|West Midlands ||8,382 ||8,354||8,592||2.8% ||2.5%|
|North West||8,564 ||8,588||8,831 ||3.1%||3.1%|
|South West ||9,093||9,065 || 9,310|| 2.7%||2.4%|
|South East ||10,795 ||10,511 ||10,747 ||2.2%||-0.4%|
|Greater London||12,135 ||11,623||11,843 ||1.9% ||-2.4%|
|East Midlands ||8,729 ||8,717 ||8,882|| 1.9%||1.8%|
|UK||9,406 ||9,149||9,393 ||2.7% ||-0.1%|
Housing costs in Scotland (£8,523) are 9% (£870) lower than the UK average (£9,393). Unsurprisingly, total annual costs of owning and running a home are highest in London, at £11,843. This is 52% (£4,051) higher than in Northern Ireland (£7,793), which has the lowest costs.Mortgage payments have fallen by nearly a quarter since 2008
The typical annual mortgage payment in Scotland has fallen by 23% (-£864) over the past four years from £3,775 in January 2008 to £2,910 in January 2012. This decline reflects both the significant fall in mortgage rates and the reduction in house prices over the period.
Partly offsetting the rising cost of most of the other housing expense categories
The cost of nine of the other 10 housing expenditure categories tracked has risen since 2008. Utility bills recorded the biggest increase (50%), followed by home and garden tools (28%) and home maintenance (20%). Consumer prices, in general, increased by 15% over the period.
Housing costs up 50% over the past decade
Between January 2002 and January 2012, the average annual cost associated with owning and running a home in Scotland rose by 50% (£2,846) from £5,677 to £8,523. This is nearly double the increase in consumer prices over the period (28%).
The rise in the cost of housing since 2002 has been driven by a £1,066 rise in gas and electricity bills, £1,025 increase in mortgage payments (notwithstanding the significant decline since 2008), and a £220 increase in council tax payments. These increases combined accounted for 81% of the total rise in housing costs.
Nitesh Patel, housing economist at Bank of Scotland, commented:
„The typical costs of owning and running a home in Scotland have increased over the past year even though interest rates remain at a historic low. This has happened because the substantial fall in mortgage payments over recent years has been more than offset by increases in most of the other costs associated with home ownership. The prospect of declining consumer price inflation through much of 2012 may help the costs associated with running a home to ease as well, providing some welcome relief to homeowners.“