09 Nov 2020
Posted by Barry Aldworth 
The annual cost of owning and maintaining a family home has risen by over €400 per annum according to the AA’s latest ‘Cost of Running a Home’ report. On average, an Irish homeowner can now expect to spend almost €18,000 per annum on owning and maintaining their home.
Research undertaken by the insurance intermediary has found that the cost of running a home in Ireland comes to €17,811.09, a significant increase from last year’s calculation of €17,393.25. The AA’s latest findings means that the cost of owning and maintaining a home equate to approximately 41.8% of the current average Irish national wage[1].
The AA carries out a detailed calculation each year which looks at the total cost of owning a house and subsequently running one in Ireland. Mortgage and property tax are calculated based on the current average property price. All other expenditure – from broadband to heating, to the cost of domestic appliances – is researched and calculated according to prices as of October 2020.
The increase in the cost of running a home comes following a rise in the national average price of a second hand home in Ireland. Values increased from €269,000 during the third quarter of last year to €282,000 in the third quarter of this year – an increase of €13,000. This increase in the cost of acquiring a home has caused a significant increase in mortgage repayment costs, the main driver behind the increase in home ownership costs.
According to the AA’s calculations, those who took out a 90 percent mortgage this year are likely to pay €11,404.15 per annum in mortgage repayments – an increase of almost €400 or 3.48% on last year.
“Despite the economic impact of the COVID-19 pandemic, the average cost of owning and maintaining a home in Ireland has climbed for 5th year in a row. While house prices and living costs remain significantly below the peaks of the Celtic Tiger, the continued upward trajectory represents a major issue for both potential buyers and those trying to meeting their mortgage repayments during difficult economic circumstances,” Conor Faughnan, AA Director of Consumer Affairs stated. “There is some good news, however, for homeowners as many of the day-to-day costs, such as heating and electricity have fallen compared to 2019.”
“In the period since 2015, house prices have increased by almost €80,000, with the AA’s annual report showing that the cost of running a home has increased by over €2,000 in the same period. However, those homeowners who regularly review their bills, purchases, and subscriptions could be faring better than most, as on everything from your mortgage to your bin service the report found clear value in shopping around.”
While the AA bases its calculations on those of a new buyer, there is also the ‘negative equity generation’ – homeowners who bought their house at the peak of the boom. The AA gives figures for that group too, assuming the house is bought in 2007. That group currently pays €4,270.37 more on their mortgage repayments than their counterparts who purchased their homes in the third quarter of this year.
Maintenance, repair and contingency funds is the second single most expensive bill for Irish householder, but has dropped by 1.2% since last year. The AA estimates that the average homeowner is likely to spend or set aside €1,249.18 each year to keep up with wear and tear. This figure equates to slightly over 7 percent of the overall estimated cost of owning and running a home.
Taking annual average usage figures of 11,000 kWh and 4,200 kWh for a three or four bedroom detached house respectively, the AA estimates that the average homeowner will spend €717.97 (-11.98%) heating their home this year and a further €979.18 (-2.06 percent) on electricity. However, this year there is increased energy useage by homes during the pandemic. The AA estimating that the average household will spend an additional €210.47 on gas and electricity[2] combined this year as a result of more people working from home and some older children who had previously been renting opting to move back into the family home.
Among the variables that remained the same as or close to last year were television licence costs at €160.
Other costs included in the AA Home Insurance study were: i) home insurance (building and contents combined) which is calculated at about €564.09, ii) telephone and broadband bills at €396.67, iii) household appliances at €545.03, iv) household cleaning products at €334.27, v) domestic refuse collection at €289.08.
[1] CSO Earning and Labour Costs Q2 2020
[2] See Cost of Running a Home 2020 Breakdown of Costs document provided.
