Cost of Homeownership at Lowest Level for 10 Years

Although house prices and rents have soared across the UK over the past decade, the proportion of household expenditure spent on homeownership is actually at the lowest it has been over the last ten years, according to new research.

Since 2007, the average house price in the UK has risen by 28%, while the average rent price has also jumped, by 15%. The Office for National Statistics (ONS) also reports that the weekly expenditure of an average UK household has reached its highest level in the past decade, having grown by 24% since 2007.

But, while our outgoings may be on the up, a study by hybrid estate agent Emoov.co.uk has found that the proportion of household expenditure spend on homeownership is at the lowest level it has been for the last ten years. In addition, the percentage of weekly outgoings spent on rent is also the lowest it has been since 2011.

Using data from the ONS, Emoov looked at all of the components of household expenditure since 2007 across all outgoings associated with owning or renting a property, and what percentage of the total average weekly household expenditure they accounted for.

The research found that the percentage allocated to paying weekly mortgage interest payments is the lowest it has been since 2007, with rent also seeing a decline to a six-year low.

As a percentage of the total household expenditure, the average amount of our household outgoings spent on mortgage interest payments has dropped to just 3.77% – a notable difference to the 7+% peak recorded in 2007/08.

Cost of Homeownership at Lowest Level for 10 Years

Similarly, rent now accounts for just 8.52% of our outgoings – the lowest it has been since 2011, when it accounted for 8.44% of weekly household expenditure.

The cost of running our homes has also reduced, with water supply at its lowest proportion of total household expenditure since 2008 (1.61%).

The price of electric, gas and other fuels in relation to other outgoings has also hit a nine-year low, and, although it is currently much higher than most other outgoings, at 4.01%, it has fallen to the same level as 2008.

Finally, the cost of Stamp Duty is at its lowest level in the last ten years, at just 0.04% of the average weekly household expenditure, having peaked in 2003 at 0.14%.

So, what is it that is squeezing the affordability of owning or renting a home?

The cost of maintaining a home is now at its highest (1.55%) in six years, having peaked at 1.59% in 2011, before gradually breaking the 1.5% threshold again in 2017.

The total cost of household goods and services is at a ten-year high, now accounting for 7.09% of total household expenditure.

The amount we’re spending of our total weekly household expenditure on Council Tax is also at its highest level since 2011, now accounting for 4.04% of our costs.

Russell Quirk, the Founder and CEO of Emoov, comments on the findings: “Despite the woes of the Brexit outcome and a failed snap election, house prices and rent have continued to creep up, remaining the largest financial hurdle for many where renting or homeownership is concerned.

“That said, while they still account for the largest proportion of our household expenditure, the cost has actually reduced when compared to the bigger picture of our total household outgoings.”

He continues: “Unfortunately, while the proportion of spend in terms of getting a roof over our head may be reducing, the cost of maintaining that roof is highest it has been in a long time.

“For those looking to get onto or further climb the ladder, it also shows the importance of managing costs when trying to save, and demonstrates how reducing other weekly outgoings can make all the difference in improving your purchase power.”

In addition to this research, the Government has now released its latest English Housing Survey, showing that private renting is now the most prevalent tenure in London. Read more results here.