‘Rental costs consuming a painful 55% of earnings’

Richard Hemans was commenting following the release of the States residential property prices bulletin for the first quarter of the year, which noted house prices falling slowly while rents continued to increase.

‘The cost of renting a property increased by 7% over the last 12 months and remains very elevated,’ he said.

‘Rental prices have been a major driver of inflation in the island and have increased much faster than in Jersey. The ongoing strength will continue to put upward pressure on local inflation. The cost of renting a property in Guernsey has increased by 52% since the pandemic as the population has grown and not enough properties have been built.

‘The last figures from Q3 2024 show that rental costs consume a painful 55% of earnings, leaving little scope for discretionary spending once essential purchases and taxation is paid.’

A modest fall in the cost of buying a home of 3.1% in the past year compares to 8.2% in Jersey, while the open market enjoyed a strong year, with prices going up by 22.9% and transactions up by 15.8% to 66 units, just below the 25-year average.

Mr Hemans said that a lack of housebuilding activity would keep prices high, given an environment of full employment, robust earnings, falling interest rates and a growing population.

‘The scale of the housing challenge has been recognised, and momentum is building to address the issue, but over the short term this disequilibrium will ensure that prices remain elevated while transactions will remain below historic levels.’

Examples of current local market advertised rentals

A St Peter Port studio flat – £880 a month

A one-bed St Sampson’s bungalow – £1,800 a month

A two-bed St Peter Port flat – £1,800 a month

A three-bed Castel bungalow – £2,850 a month

A three-bed Forest cottage – £3,100 a month

A four-bed St Saviour’s house – £4,000 a month