The annual cost of owning and maintaining a family home has dropped for the first time in four years to €16,210.49 – equating to about 41% of the current average Irish national wage – according to figures issued by AA Home Insurance.
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 September/October 2015.
The significant decrease comes despite a 6.2 percent rise in the national average price of a second-hand house in Ireland. Values rose from €193,000 during the third quarter of last year to €205,000 of the same period this year.
Those who take out a 90 percent mortgage this year are likely to pay €9,417.03 per annum – down 6.7 percent on last year.
“One of the key drivers of the year-on-year decrease is that current mortgage lending rates are considerably lower now than this period last year,” says AA Director of Consumer Affairs, Conor Faughnan.
“The change is down to market forces and pressures from the Central Bank of Ireland and is undoubtedly good news for first time buyers.”
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 €6,257.49, or a massive 66.45 percent 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 householders and is down by a further 3 percent. The AA estimates that the average homeowner is likely to spend or set aside €1,240.63 each year to keep up with wear and tear. This figure equates to almost 8 percent of the overall estimated cost of owning and running a home.
Rising property values mean that the AA calculations now assume a higher property tax threshold of €405, €90 more than last year.
Taking annual average usage figures of 15,500 kWh and 5,300 kWh for a three or four bedroom detached house respectively, the AA estimates that the average homeowner will spend €989.02 (-4 percent) heating their home this year and a further €1,117.42 (-4 percent) on electricity.
Off-setting this year-on-year decrease for both bills is an increase in gas pipeline supplies and strong wind generation which for the month of September accounted for 17 percent of the total electricity generation in Ireland.
The two variables that remained the same as last year were television licence costs at €160 and AA Home Membership at €119.88.
Other costs included in the AA Home Insurance study were: i) home insurance (building and contents combined) which is calculated at about €492.78, ii) telephone and broadband bills at €453.79, iii)household appliances at €542.64, iv) household cleaning products at €320.58, v) domestic refuse collection at €292.72. Water charges are a new addition to our suite of costs this year at an estimated fee of €260 for a multi-adult household.
“Owning and maintaining a home absorbs a significant amount of our income. Our research reveals that it certainly pays to shop around for general household expenses such as refuse collection, home heating and telephone and broadband services,” says Conor.