Annual cost of owning and running a home more than €15,000 reports AA

Negative equity homeowners paying €6,600 above average to own and run their homes

The average annual cost of owning and maintaining a home in Ireland, based on today’s house prices, is In the region of €15,400 according to a new study published today by the AA.  This figure equates to 43% of the average current Irish annual wage in Ireland[1]  of €35,765.

The study also reveals that the negative equity generation who bought in the height of the property boom in 2007 at an average price of €344,000 and who took out a 92% mortgage are likely to be shelling out roughly €22,000 per annum to own and run their homes.  With estimated repayments of €15,675, this cohort are also paying more each year on their mortgages alone than many of their peers will spend on owning and running their homes combined. 

In stark contrast, a homeowner who buys a house today at the current average market price of €172,000[2] is likely to pay in the region of €9,000 on mortgages repayments each year.

“If you’re unfortunate enough to be one of the negative equity generation and your finances are stretched, chances are you’ll know where every penny is going.  For others where there is less scrutiny on the household budget we’d imagine people will be genuinely shocked at how much they’re spending on their homes each year.” Says Faughnan.he AA who have considerably ramped up their presence in the home market recently through their home insurance and home emergency response service, reveal that in cases where a premium was paid for the house, as much as 72% of the overall combined cost of owning and running a home is going on mortgage repayments.  This compares to 59% for those who purchase at the current average Irish house price.

Following mortgage repayments, repair and maintenance were identified as the next biggest single cost to Ireland’s homeowners.  The AA estimates that the average homeowner is likely to spend or set aside €1,290 each year to keep up with wear and tear.  This figure equates to 8% of the overall estimated cost of owning and  running a home based on current house prices.

Other big costs to stand out during the study were home heating costs and electricity bills both of which have been affected recently by rising fuel commodity costs and the weak performance of the euro against sterling.   Taking annual average usage figures of 20,000 kWh and 5,300 kWh for a 3 or 4 bedroom detached house respectively, the AA estimates that the average homeowner will spend €1,210 heating their home this year and a further €1024.43 on electricity.   This figure however is set to rise next month  with Bord Gáis prices due to rise by 21% and ESB prices by 12%.  Airtricity prices also went up by 12.3% at the beginning of this month.

Other costs included in the study are home insurance (building and contents combined) which comes in at €500, AA Home Emergency Response cover at €88, telephone and broadband bill coming in at €357.07, bin charges at €289.68 and basic digital TV packages at €285, Household appliances at €662.03 and household cleaning products at €300.

Finally among the fixed charges included in the AA’s study were the household tax at €100 and TV license at €160.

“There’s always tremendous interest in the cost of running a car and we thought a report on the average cost of running a home in Ireland would make for some pretty compelling reading.”  Says Conor Faughnan, Director of Consumer Affairs, AA Ireland.  “As home insurance providers we know well how price sensitive customers are these days and we hope this study helps in highlighting areas where homeowners can look to reduce their costs.”

End

Notes to the editor;

1. Full set of explanatory tables available upon request.