Guernsey’s house price to income ratio joint worst in western Europe

Tuesday 18 July 2023

The fact that Guernsey’s housing market is experiencing “systemic failure” is just one of several worrying revelations published within professional research commissioned by Environment & Infrastructure.

Arc4 are housing market experts who were tasked by the States of Guernsey department with investigating why the local housing market is in a perilous state, and what to do about it. They spoke to civil servants, developers, builders, landlords, tenants, homeowners, and reviewed the relevant data to draw conclusions.

Its findings have formed part of E&I’s new Guernsey Housing Plan which sets out the immediate work required by different States departments over the next few years to lubricate development and ensure housing is fit for need and purpose. 

The challenge is complex and requires input from multiple sectors however, which is why arc4 concluded that to improve getting people onto the housing ladder, the ladder itself must be fixed. 

The issues are being experienced elsewhere, but Guernsey is unique in being in comparatively worse circumstances.

Pictured: The leap in house prices in Guernsey and comparator jurisdictions since 2010.

Findings

The price to income ratio for property purchases is moderately worse than Jersey, but significantly worse than the Isle of Man and England, placing the island joint bottom of all western European countries.

Unaffordability of housing locally has stretched back two decades but is now at an all-time high, with house purchase prices fast accelerating away from average earnings.

Since 2009, property prices for the cheapest stock have doubled, while average house prices have risen by over 80%. Wages only rose by less than 35% in the same period. Arc4 said this disparity is unsustainable.

Rents have also increased by 44% since 2009 and jumped up just after the covid-19 pandemic. The average monthly rent spent by Guernsey residents is over £1,817 – nearly double the rate in England and what arc4 consider to be sustainable

More than a quarter of all local housing is private rental – higher than in England and Jersey – but is unregulated and therefore could be prone to variations in quality. There is also no measure of quality, standards, or energy efficiency to illustrate the scale of the problem.

The private rental market is having to prop up people who would ordinarily be able to obtain a mortgage, or be accommodated in public housing, but the inability to meet demand has inflated prices and left people with no choice but to rent. 

There are also fewer social housing units as a percentage of the total housing stock in Guernsey compared to Jersey and England. 

There’s a lack of suitable housing for first time buyers, those looking to downsize or upsize, those with specialist needs, and for those required for essential public services such as healthcare, arc4 said.

Pictured: The number of units built in 2021 compared to what the States believe will be required within five years.

One of arc4’s key recommendations is that the States undertake a householders survey to gauge current satisfaction levels, future housing aspirations, whether any of the government’s interventions have assisted, and whether additional support is needed.

Financial support schemes provided by Guernsey’s government to help tenants, landlords, and homeowners make improvements to properties in the worst condition could also improve accessibility and health outcomes.

There are also few state mechanisms to deal with homelessness or prevent the problem from occurring in the first place. These should be investigated.

Above all though, arc4 says increasing supply of suitable housing to meet demand, especially while anticipating a growth in population, is essential to improve accessibility and affordability.

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