The average purchase price of a home peaked at more than 16 times the average single person’s earnings in 2023.
The multiple – known as the price-to-earnings ratio – has fallen since, possibly to about 13 times, although the States’ published data are so out of date owing to IT problems that an accurate calculation has become impossible.
‘We’re trying to prioritise housing supply and affordability. If we get more properties into the market by whatever means, we can try to stabilise prices such that incomes can catch up. That’s our main objective,’ said Deputy Williams.
Listen to the full interview with Deputy Williams on the latest Guernsey Press Politics Podcast
The most recent figures available indicate that lowering the multiple to 10 would require earnings to increase by about 25% while house prices would need to remain at broadly their current level.
‘I think we could get to that point,’ said Deputy Williams.
‘It’s an aspiration. I think it’s a reasonable aspiration over time, but this is not quick and there is no magic wand to sort out the housing market.
‘We are just trying to do what we can to ease the market. If we can increase the supply of new homes faster than it has been and get prices to the point where they balance with incomes, say to 10 times, then great.
‘Otherwise buyers are basically dependent on the bank of mum and dad helping them out and that is highly unfair and unsatisfactory for all those people who don’t have parents who can support them with deposits and mortgages.’
Local mortgage providers are typically prepared to lend a homebuying couple a sum equal to five times their combined income – the equivalent of 10 times average earnings if each of the couple works – which Deputy Williams said was another reason to aim for a price-to-earnings ratio of 10 in Guernsey.
His words echoed those of former deputy Lyndon Trott, who said when he was Policy & Resources president that he would like the States to aim for a reduction in the price-to-earnings ratio to between nine and 11.
A report produced in 2023 by housing consultants Arc4 showed that housing in Guernsey was less affordable than anywhere else in western Europe.
In the 15-year period before that report, average house prices had nearly doubled, but average earnings had increased by less than a third.
Even when borrowing rates were at an historic low, Arc4 said that rents locally were almost twice what it considered sustainable, and purchase prices were four times the level needed for sustainable mortgage repayments.
The average purchase price during the third quarter of last year was about £592,000, down from a high of nearly £650,000 in 2023.
Average earnings were just less than £43,000 in the summer of 2024, the latest period for which figures have been published by the States.
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