AN IRISH family who bought a house at the height of the property boom would need to earn more than €920 a week after tax just to maintain their home and to cover everyday expenses, new figures reveal.
The figures come from AA Home Insurance and independent research carried out by this newspaper.
The study, released this morning, priced mortgages, home insurance and utility bills as well as a basket of 10 other goods and services. It shows the average annual cost of owning and maintaining a home in the Republic, based on today’s house prices, is €15,400. However, for people who bought in 2007 and paid the average price of €344,000, the cost of maintenance climbs dramatically to €22,000 a year.
The AA’s figures do not include groceries or the cost of running a car, while other elements – such as health insurance, clothes, mobile phone bills, education, childcare and entertainment – are also omitted.
When all these costs are added together, the average Irish family needs to earn more than €40,000 just to keep on top of everyday expenses, while boom-time buyers need €47,833. The average current annual wage in the Republic is €35,765 before tax.
The figures make for bleak reading ahead of December’s budget. They come on the back of repeated surveys from the Irish League of Credit Unions that show Irish consumers have very little disposable income once bills are paid, and illustrate why the mortgage arrears crisis continues to worsen. More than one in five home loans are now in financial difficulty, according to Central Bank figures.
Following mortgage repayments, the AA identified repair and maintenance as the next biggest single cost to homeowners. It estimated that the average homeowner will spend or set aside €1,290 each year for wear and tear.
Other big costs to stand out in the study were home-heating costs and electricity bills, both of which have been affected by rising fuel prices and the weak performance of the euro against sterling.
The AA puts the cost of domestic electricity and gas at more than €2,200, and that is before the latest round of price hikes, which are due to come into effect next month.
The true cost of running a home is significantly higher than the €22,000 outlined in the AA’s figures, however. The average Irish family of two adults and two children will spend about €2,000 on health insurance, and more than €5,000 on food. Close to €5,000 will be spent on running a single car, when tax, insurance, depreciation and fuel are factored in. Education and childcare costs for two children adds nearly €8,000 to the annual bill, taking the total costs to almost €50,000.
“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,” said the AA’s Conor Faughnan.
