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Running costs increase by 5%

The cost of owning and running a house rose by 5 per cent in 2003/04, according to Halifax’s third annual review.

Rising council tax bills accounted for a third of the rise.

Annual housing costs, at 5,948, made up 23 per cent of total household spending by owner-occupiers and was a third higher than household spending on basic items such as food and drink, clothing, education and healthcare.

Halifax says council tax will be one of the main factors driving increased housing costs in 2004/05 and 2005/06. It estimates costs rose by 6 per cent in 2004/05 to 6,303, driven by higher mortgage servicing costs and council tax. It forecasts a 2 per cent rise to 6,406 in 2005/06 with a likely fall in mortgage servicing costs partially offsetting rising utility and council tax bills.

The research, based on ONS statistics, also shows wide disparity across the country. Londoners pay the most at 7,691 a year, 77 per cent higher than in the North-east, the cheapest area at 4,358. Costs in the South-west are the highest relative to gross disposable income, at 16 per cent.

Halifax group economist Tim Crawford says: “Costs have increased at a much faster rate than inflation. Council tax continues to be a key driver while in the past year higher mortgage servicing costs have also been important.”

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