INCREASING housing supply is key to lowering property prices, which climbed by an average of £1,788 a week in 2021.
This statement came from the Housing Minister, who admitted that the continually increasing house prices, which were laid bare in this week’s House Price Index, could be harming young Islanders’ aspirations to own their own property and forcing families to live in inadequate accommodation.
The average cost of a house rose to £673,000 in 2021, a 16% increase from £580,000 in the preceding year, according to the latest report released by Statistics Jersey, which covered the final quarter of last year.
All property types recorded their highest annual average price rise seen to date.
Last June, Deputy Russell Labey unveiled his housing action plan – entitled Creating Better Homes – which aims to increase the supply of new housing from the current figure of 400 homes per year to more than 700 by 2025.
Deputy Labey said: ‘Increasing supply is key. That will happen. We’ve recently secured more publicly owned sites for housing and more will follow. Beyond supply, we continue to thoroughly explore every option. This is not easy. Traditionally, when government fiscally intervenes in the housing market, prices go up. The rent increase has been kept to 2%. The last thing we want to do is send that sky-rocketing. The challenge is to find balanced measures that will take some heat out of the market without causing any unintended consequences.’
The average price of a UK property at the end of 2021 stood at £271,000 – around 2½ times lower than the Jersey average of £673,000 – while even the UK’s most expensive region, London, was more than £150,000 lower than the Island’s figure.
For the first time, the average cost of a three-bedroom family house climbed above £800,000 in quarter three of 2021, meaning that a couple on average earnings in Jersey would have to borrow nine times their combined salary if they put down a £40,000 deposit. By the end of 2021, the average price of a three-bedroom house had risen to £861,000. A four-bedroom home rose to an average price of £1,339,000.
Deputy Labey added that the continued rise in house prices since 2018 was a result of ‘high demand outstripping supply in a low-interest-rate environment’, and added that this situation was ‘more acutely felt in a small island where people could not travel further to where prices are lower’.
‘The consequences of high house prices could affect young Islanders’ aspirations, if they feel they can’t get on to the property ladder. Families are also affected by living in the accommodation they can afford rather than the accommodation that they need or desire. This could lead to reduced competitiveness and attractiveness of the Island, and the risk of household borrowing being increasingly exposed to rising interest rates,’ he said.
‘Practical measures are safe and under way. Within the supply already in the pipeline, we aim to increase the availability of assisted-purchase homes and we’re working to facilitate the extensive use of modern methods of construction, which are competitively priced, greener and far less labour-intensive than traditional construction and much quicker to produce.’