The latest analysis from finance experts, RIFT, has revealed that while households may be spending less to try and combat the ongoing high cost of living, the proportion of that spend associated with our homes has increased, as the cost of owning and running a home has increased by 14% over the last five years – a jump of £863 per year.
RIFT analysed the latest data from the ONS* on housing expenditure and family spending, looking at the annual cost of running a household based on the core outgoings such as mortgage payments, bills, maintenance and insurance, how this cost has changed over the last five years, and what it equates to as a percentage of our overall household spend.
The research shows that the average household spends an estimated £27,498 a year on total expenditure, which includes everything, not just costs associated with their household.
While this total spend has reduced by -4.6% over the last five years as households look to cut back amidst the increasing cost of living, the proportion of this total spend attributed to our homes has increased, up from 21% five years ago to 25% today.
The analysis by RIFT shows that this increased proportion of spend attributed to our homes is due to the fact that all core areas have seen a cost increase. Today, the average household spends an estimated £6,994 a year on core household outgoings, a sum that has climbed by £863 a year or 14.1%.
But which areas of the home are costing us more today?
Charges such as council tax and water charges have seen the steepest increase, up by 22.1% in the last five years – adding an additional £343 per year to our household costs.
The cost of making alterations and improvements to our homes has also increased considerably, up 17.9% in the last five years, adding £244 per year to our household costs – driven by a 27.8% increase in hiring home improvement professionals, in particular.
In addition to home improvements, the cost of maintaining and repairing our homes has seen the third largest jump, climbing by 14.1% in five years.
Mortgage costs are up 8%, while household insurances have increased by 4.2% – driven by a 300% increase in household appliances insurance.
But while mortgage costs may have increased at one of the lowest rates, they remain the highest household outgoing at an average of £2,730 per year, with council tax and water charges (£1,893) and home improvements (£1,607) also amongst the most expensive.
Bradley Post, MD of RIFT, said, “While inflation may be easing, households across the nation continue to struggle with the high cost of living and we’ve seen the average household reduce their total outgoings by an average of 4.6% over the last five years in order to get by.
Of course, while some costs can be cut back on, others can’t and during the same time period, the costs associated with running our homes have increased by 14.1%. That’s an additional £863 per year, with charges such as council tax and water driving this increase.
So it’s no surprise that many households continue to struggle as despite cutting back on non-essential outgoings, the core expenses related to our homes have continued to rise.”
