£100,000: Income needed to buy a three-bed home

New figures released today show that between July and September this year the average price of a three-bedroom house rose to to £560,000 – its highest level since 2008.

And according to the Jersey House Price Index the cost of such a home is £11,000 higher than the previous quarter and £26,000 higher than the 2016 average.

The average salary for a full-time employee in Jersey is £37,960 per year, according to figures released in the Index of Average Earnings report published in June.

This would mean that for a typical mortgage – where a household has saved a ten per cent deposit and intends to borrow five times its annual income – a household would need to earn at least £100,000 a year to buy a three-bedroom property at current prices.

Earlier this month the Bank of England announced its base rate would rise from 0.25 per cent to 0.5 per cent, meaning that Islanders now face paying around an extra £700 per year towards a mortgage on an average home in Jersey.

Meanwhile, the cost of a four-bedroom house has also risen by £36,000, to £840,000, this quarter compared to the previous three months. However, the average cost of a two-bedroom house has dropped by £4,000 to £420,000.

The UK House Price Index in the third quarter of 2017 was five per cent higher on an annual basis compared to Jersey.

Housing Minister Anne Pryke said: ‘The quarterly figures for quarter three of 2017 are good news. Modest house price growth remains consistent with the general economic picture of an improving economy in the short term. However, uncertainty remains about economic performance in the medium term, as highlighted by the Fiscal Policy Panel.’

Lorraine Mclean, mortgage sales manager of Skipton International, said: ‘We’ve had an increasing stream of inquiries at our Mortgage Centre since it opened in April this year, so we fully expected to see the Jersey housing market continue its steady growth this quarter. With the base rate having increased for the first time in ten years, there was some concern as to how this would be received in the property market but we don’t anticipate there being much immediate impact.

‘This rise was well expected by home owners and it certainly hasn’t dampened any interest from Islanders looking to make the right move. Skipton International has taken the decision not to increase its standard variable rate, which will benefit our mortgage customers on standard variable and discount variable rate products.’

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