The latest House Price Index survey, produced by Statistics Jersey, has revealed that private sector landlords increased rental rates by 9% between 2017 and 2018.
During the same period, the average cost of a home in Jersey increased by 7% – the biggest increase in a decade. The average price of a home in Jersey now stands at £491,000, making the Island considerably more expensive than any region in the UK, including London, where the figure was £476,000.
Figures produced last June indicated that average wages in the Island increased by 3.5%, without taking into account inflation, showing that the gap between earnings and housing costs has further widened.
The new report says that housing affordability decreased last year, with a working household receiving a net average income – £56,000 – unable to afford a median-priced house of any type.
It adds that such a family would now only be able to afford an average-priced one- or two-bedroom flat.
By comparison, the median average cost of a two-bedroom house was £430,000, a three-bedroom house was £555,000 and a four-bed house was £815,000.
Pressure on housing costs could increase, with the recent Objective Assessment of Housing Need survey finding that more than 7,000 homes will need to be built in Jersey by 2030 if the Island’s population continues to grow at the current rate of around 1,000 people per year.
Peter Seymour, the Mortgage Shop’s managing director, said that the vision of a family home for many people in Jersey had drastically changed ‘in the last few years’.
‘A three-bedroom home until a few years ago was considered to be a family home and that is what people aspired to own,’ he said.
‘The thought was, even if they didn’t have a family, then they could buy a three-bedroom home and later grow into it when they had a family.
‘Unfortunately, what we are seeing now is many people are starting to see a two-bedroom flat as their family home. They accept that a two-bedroom flat is all they can afford and that they could be in there for all of their life.’
He added that many young Islanders were still facing difficulties should they wish to get on the housing ladder, in particular when saving for a deposit.
‘The problem for many families, if they are, say, earning something average like £50,000 to £60,000 per year, is saving up for a deposit,’ he said.
‘It is going to take a hell of a long time for them to do so. And that’s alongside other problems. What we would like to see is 100% mortgages reintroduced, except with much better rates of interest.’
The private-rental sector is now second only to the financial services industry in terms of how much income it generates in the Island and accounts for 14.5% of the Jersey’s Gross Value Added (economic output).
Housing prices, including rents and mortgage costs, have been a key driver of Jersey’s rising cost of living, with the latest recorded inflation rate of 3.9% double that of the UK.
A petition calling for rental caps to be introduced in Jersey has received more than 5,000 signatures and is due to be considered for debate by the States Assembly.
