Cost of renting somewhere to live has reached plateau

‘Interestingly, the latest property bulletin appears to show that rental prices are stabilising, albeit they’re still higher than this time last year and have seen significant five-year growth,’ said Gill Mooney, head of lettings at Savills Guernsey.

‘People are now keeping a much closer eye on their finances and are having to cut their cloth accordingly. In order to pass referencing, annual income also has to be at least 30 times the monthly rent – so it does limit what people can afford.’

The latest quarterly residential property prices bulletin from the States showed that the average rent at the end of 2022 was £1,725 a month, 4.5% higher than it was a year ago. But all that growth had been in the beginning of the year and rents had fallen over the second half of the year.

During the same period, average local market house prices rose by 15.9%.

The report included data that compares house prices to rent over the last 12 years.

Over that period the rise and fall of rents has largely tracked purchase prices, but as house prices have continued to rise, rents have begun to plateau, leading to the current position seeing the largest difference between the two markets since the data was first collected in 2009.

In 2012, the average rent for a four-bed house was £1,800, and at the end of 2022 it was £2,880 – a rise of 60%.

Over the same period the average cost of renting a one-bed flat increased by 52% from £850 to £1,300.

‘It is now at the lower end of the market where estate agents are currently seeing the most interest,’ said Mrs Mooney.

‘Demand for smaller apartments – and especially, but not exclusively, those in a central location – is currently incredibly high. Many are letting within days and without having to be advertised. We have a large pool of applicants, the vast majority of which are coming from overseas to work in the financial sector and medical professions. By contrast, the market for larger properties has been very quiet.’

Cooper Brouard lettings & management negotiator Ross Yeates agreed that one- and two-bedroom flats were proving the most popular with potential customers, and they were predominately from the finance and medical sectors.

‘We are seeing more individuals than families looking to move at the moment,’ he said.

‘The family home market is less buoyant, possibly because rents have gone so high.’

Mr Yeates said he was not aware of concern from landlords that changes to mortgage interest rates may push up rental prices.

‘Generally speaking prices have plateaued slightly. Lot of leases allow rents to increase in line with the RPI, which is now 8%, but most landlords are not doing that and are finding a happy medium with their tenants.’