Ownership at too high a price?

They quite rightly say that people hoping to buy a first home should not be too ambitious about the sort of property they will be able to buy, given present market conditions and the state of the economy.

Sadly, because of complex interacting factors – which include demand exceeding supply and the high cost of a very basic commodity, land – few young couples can hope to buy a two- or three-bedroom house, complete with garden and garage, when they first set foot on the housing ladder. The average cost of such properties has simply priced a great many out of the market.

This would not amount to an acute problem if it were not for another fact of Island life – rents for half-decent properties are also sky high.

As the association presidents suggest, those hoping to secure a first mortgage must be realistic enough to consider buying an apartment as a first purchase. However, we can no longer be confident that a rising market will always offer future opportunities to trade up.

If a boom follows recessionary conditions, this may once again become a normal state of affairs, but caution is appropriate – there is nothing in the laws of economics which says that recovery, and a return to rising property prices, are inevitable.

It is of course true that the Housing Minister, Andrew Green, and the Treasury Minister, Philip Ozouf, are working hard to develop measures aimed at helping first-time buyers realise their dreams and making the Island’s housing market a little more user-friendly.

The trouble is that government intervention, in this instance through the proposed States housing deposit scheme, can be an open invitation for the law of unintended consequences to come into play.

Although the proposed scheme would help some potential buyers to access three-quarters of a 20 per cent deposit, at a fundamental level it would not make Jersey homes any more affordable.

Unless very carefully administered, it might also plunge some buyers into more debt than they could manage. In addition, the issue of using taxpayers’ money for what might appear to be the benefit of a restricted section of the community will always be controversial.