The average cost of owning and running a home in Ireland now costs €16,432 per annum, which is equivalent to 46% of the average national Irish wage of €35,830 according to the AA’s Annual Cost of running a home study which is now in its third year. The AA is best known for its roadside & motor services but is also a major Home Insurance provider and it provides emergency home repairs as a call-out service to its customers.
€16,432 represents a 5% increase on the same period last year, a rise which is mainly driven by the significant rise in house prices nationally that has taken place over the last year.
“Our calculations are based on a ‘typical’ Irish house and include costs for mortgage payments, energy & heating, repairs and maintenance.” Says Director of Consumer Affairs Conor Faughnan. “The recent surge in house prices affects the 2014 figures. This is partly off-set however by the fact that the typical Irish house has become more energy-efficient.”
The AA index figure assumes an average house bought this year but data is also given for a house bought at the peak of the boom in 2007. The ‘negative equity’ generation may have seen their situation improve on paper with rising house values but they still face an annual cost of living that is €6.5K higher than those who bought at today’s prices.
The average price of a 2nd hand house in Ireland during the third quarter of this year was €193,000 up from €170,000 during the same period last year. As a result, those who a bought a home during July and September this year are shelling out just shy of €900 more per annum on average on their mortgage repayments compared to their counterparts who bought during the same quarter last year.
While €900 is a stark increase, recent home buyers are still dramatically better off each month on average than those who bought a home when property prices were at their peak in 2007 according to the AA’s study. At that time the average national house price was €344,000, more than double current prices. As a result those who bought their home during the peak on average handover €5,580 more each year on their mortgage repayments alone than those who have recently bought a home. The AA calculates that it will cost those who purchased their home in 2007 €22,012.42 on average to run their homes this year, €6,356.93 (39%) more than those who bought a new home in the third quarter of this year.
Illustration: Average cost of owing and running a home in 2014 based on year of purchase:
|Year of purchase:||Av. cost of running their home in 2014:|
|2007 for €344k (then av. national house price)||€22,012.42|
|Q3 2012 for €172k (then av. national house price)||€15,421.90|
|Q3 2013 for €170k (then av. national house price)||€15,534.90|
|Q3 2014 for 193k (then av. national house price)||€15,655.49|
Energy costs are also a talking point this year, with average home heating expenditure down by 21% according to the findings of the AA’s study. This is despite an average hike in prices of 7.4% in the latter half of 2013 and further increases by all of our major energy providers during 2014 to date, with the exception of new entrant, Energia.
Offsetting these rate increases and reflective of improved energy efficiencies the average consumption rates for gas for a 3-4 bedroom property have been revised downwards from 22,000kw/h to 15,500kw/h by the Commission for Energy Regulation since the AA conducted its first cost of running a home study in 2012. However those who have made no energy efficiency improvements and continue to consume gas at their typical rate will have paid notably higher bills over the past 12 month period.
Continuing on with energy usage, electricity prices are significantly up on last year according the AA’s study as a result of price hikes and the increase by Government of the Public Service Obligation (PSO) Levy by 50% which took effect on October 1st 2013. The PSO levy is added to the bill of each domestic and small commercial customer in Ireland and the tariff is used to cover the additional costs associated with producing sustainable and renewable energy in Ireland.
In addition to the levy, household electricity prices rose by 5.1% during the second half of 2013 compared to the same period in 2012. Further increases have been introduced by all the major providers in 2014 with the exception of new entrants Energia.
On a slightly positive note the AA share that the combined home insurance costs (building and contents) have dropped for the second consecutive year, down 2% on the same period in 2013. The current average price of combined home insurance nationwide is €473.83, a figure which is based on a basket of 200 home insurance risks that is representative of the industry. The figure however excludes discounts such as those used to encourage customers to conduct their insurance business online.
“While you’re locked into certain costs such as your TV license, mortgage repayments and property tax you can certainly look for better value when it comes to the services you consume.” Says Conor Faughnan, Director of Consumer Affairs. “When there are multiple players in the market be it waste collection, electricity or insurance they are all vying for your business so make sure to shop around and get a good sense of what each is offering.”
To arrive at their eventual figure of €16,432, during their comprehensive study the AA also factored in a fund for home maintenance and repairs, household cleaning products and the replacement of household appliances in accordance with their warranty periods. In addition the average costs of home phone and broadband, a basic digital TV package, the TV license, the property tax and bin charges were also factored in.
Absent from the study for this year are domestic water charges which began on October 1st but will not be billed for until early 2015. All properties both metered and unmetered will get a bill based on an “assessed charge” for the first three quarters switching to actual consumption thereafter. The Assessed Water Charges (unmetered) for 2014/2015 will be based on the number of adults living in a domestic property.
A full set of charts are available upon request from Miriam at: firstname.lastname@example.org or 016179394.Figure sourced from IBEC and reflects the 2013 national average.  To view assessed water charges visit the Money Guide Ireland website at: www.moneyguideireland.com/unmetered-water-charges-how-will-it-work.html