Owning a House is Getting More Expensive



If you are like most Britons, the price you pay for housing represents a large share of your personal budget. Whether you make monthly payments to a landlord or a mortgage company, the spending doesn’t stop there. Renters and owners both take-on additional costs of living, such as house and contents cover, energy payments, and other residential spending. Unfortunately, as the UK faces rising inflation, housing costs are also on the way up.

House Prices Surge Upward

Sales prices for UK homes continue to remain high, particularly in Britain’s most booming districts. Conditions are so bad, many first-time buyers are frozen out of the market, unable to bring together deposits and financing for desirable properties. According to Nationwide, a typical property now costs five times more than an average first-time buyer’s annual salary. And some observers predict the number could rise to more than 15 times an earner’s wages, before house prices stop rising.

Many economists see the house price run-up as temporary, eventually yielding to values that more accurately reflect what UK homes are worth. A competing theory believes there is no end in sight and that house prices could continue to climb for decades – particularly in London and other cities. While many factors influence pricing, the possibility suggests a lack of affordable transport from surrounding areas could keep city property prices artificially high for generations.

After a prolonged period during which the pace of price growth slowed, house prices are again rising in London and other areas. It is thought a slow rate of turnover is responsible for the trend in the capital city, where home sales slowed. It is feared continued upward pressure on house prices will leave a greater share of the population renting, prevented from getting a foothold as owners.

Home Insurance Hikes

In addition to high house prices, owners and would-be buyers are now faced with another expensive reality – climbing insurance prices. Something called the Insurance Premium Tax (IPT) has recently risen, fueling a sharp upturn in home insurance prices. Brexit may also factor in, driving general economic uncertainty and protective pricing in insurance and other markets.

Home cover premiums are now rising at their highest rate in years. Over the course of the year, through July, home insurance prices rose at more than twice the inflation rate, according to Consumer Research the organization that provides the figures to the Office of National Statistics (ONS). The figure represents the fastest pace of increase seen in 3 years.

Average premiums during the period jumped to £131, reflect a 7 per cent hike. One of the hardest hit groups, insured home owners over age fifty, saw home insurance premiums rise by 7.6 per cent. The data also showed older houses cost more to insure. Homes built prior to 2000 command higher premiums than those built after the turn of the century. As expected, Londoners foot the highest bills for house cover, averaging £159 among capital city dwellers. The highest priced policies are in stark contrast to the cheapest, found in the South West of England, where average home insurance premiums are around £116.

The competitive home insurance market doesn’t respond as quickly to upward pricing pressure as some other markets, because providers are aggressive extending the lowest possible prices. Still, many analysts see prices continuing to steadily rise alongside inflation and diminished buying power from the pound. Higher overall housing costs are prompting owners to rethink their budgets, calling-in outside help to bridge the affordability gap. Even bad credit applicants have access to funding options, used to offset rising costs. But there is only so much home owners can bear, before financial housing relief becomes the only sustainable answer.

Whether you rent or own your house, rising insurance taxes and high house prices have a direct impact on your bottom line. Combined with other climbing costs of living, UK housing costs continue to tax family budgets, prompting concern from economic analysts. Only time will tell whether affordable housing returns or whether excessive costs will continue to dominate UK housing.

Paul graduated in 2001 with a degree in Finance. Since then he has gone on to work for several of the UK’s most well-known financial institutions.


An avid blogger and a huge football fan, Paul is here to guide you through the ins and outs of personal finance and perhaps save you some money in the process!


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