Are we heading for a bleak future?

While Horace Camp accepts there is a housing crisis in Guernsey, he’s far from convinced by the Guernsey Party’s proposed solution.

Mini house model and stack of coins. Business risk management. Property investment and house mortgage financial real estate concept. Business investment will increase Or bankrupt. (29567396)
Mini house model and stack of coins. Business risk management. Property investment and house mortgage financial real estate concept. Business investment will increase Or bankrupt. (29567396)

Let me start off by declaring my sympathy for Generation Rent.

As someone who would rather be the owner-occupier of a gutter than rent a palace, I feel the pain of those chucking their dead money away each month on rent and only being able to dream about being saddled with up to half a million pounds of mortgage debt instead.

Supply and demand is a terrible mistress and demand has definitely outstripped supply when it comes to the affordability of buying a home.

Just so we are all on the same page, please note that whenever I mention affordable housing I am not using it, as the States does, as an alternative phrase for social housing.

Affordable housing to me means housing that people can afford to buy and in particular housing affordable to first-time buyers. Which is what I am sure most of you already believe is what the States means whenever they issue press releases about ‘affordable housing’.

Unusually for me, I did a bit of research before writing this column and I was genuinely shocked at the price of houses in Guernsey today. I know I still do my sums in pounds, shillings and pence (I had written LSD but thought that might give the wrong impression to any reader under 50) and can recall buying my first property in Guernsey – a five-bedroom house with 200ft of modern glass, for £14,000 – but surely houses can’t be worth what they are asking these days?

The question is, of course, how do we get out of the situation we have found ourselves in? Borrowed money is cheap nowadays and partly explains why the capital prices of houses have gone up. It isn’t so much about the cost of the house but how much the mortgage costs to service.

Mortgages are serviced from income, which I am assuming Generation Rent has enough of if they can afford to pay exorbitant rent. What I presume is lacking is the capital for the deposit because Generation Rent has no savings. However, I fear if Gen Rent suddenly found £50k down the back of their sofas, the influx of new buyers would have one single effect, which would be heating up the bottom of the market and sending it shooting to astronomical levels of unaffordability.

That is unless the supply of first-time homes increases to match the demand.

The funny thing is we probably have near enough the right number of first-time buyer homes but a fair chunk of them are rentals. Should Generation Rent exit rentals and become owner-occupiers (assuming there are enough homes for them to occupy), will it not leave us with lots of empty rental properties? Both the public and private sectors have possibly managed to reduce the number of first-time buyer homes.

The first by removing TRP restrictions for licence holders, who are able to buy cheaper homes and then lift them out of the first-timer’s grasp by adding bits and bobs.

The second by gobbling up a fair proportion of FTBH and converting them to rental.

The perfect storm – and it has all happened in a single decade.

Now I have set the scene, I want to move on to the main item for today, which is the Guernsey Party’s paper on the solution for this crisis – and in particular the connected but different issue of maintaining the working population and preventing our future being bleak.

Now I know that it is very hard for Guernsey to be bleak, but it is possible and we do have the evidence of bleak times in the past to prove it. I think we can all agree the Occupation, especially the final year, was bleak. And the times long ago when strangers were not allowed to land here because food stocks were too low to feed another mouth were, I would suggest, bleak. Was it bleak when growing failed? It certainly was for some, but not all.

I wonder how Deputy Helyar defines bleak? His party’s paper suggests that in 14 years our bad demographics will shrink the workforce so much that Guernsey will enter a time of bleakness. I wonder.

Let us imagine that future Guernsey. Possibly many have fled the bleakness and few want to come and join it. The higher paid jobs may have gone and a whole new economy may have taken its place. House prices will have dropped like a stone as supply outstrips demand.

Yes, just imagine a Guernsey of 45,000 people, with most working at manual jobs, and the services delivered by the States reduced to an affordable level where ‘look after the pennies and the pounds will look after themselves’ is the mantra for all politicians and civil servants.

Sounds like a very bleak Hell on Earth? Well, welcome back to Guernsey in the 1950s, which certainly was not a bleak place.

But seriously, the one bit that got under my skin was the suggestion we grow our population by targeting high earners – called ‘freshers’ in the Guernsey Party document – and designate a section of our housing stock for them.

This would give us three markets – Local, Fresher and Open.

And 1,000 freshers would be the equivalent of 8,000 more lowly paid newcomers in the battle against bleakness.

The Guernsey Party does still have a place for the rest of us, presumably because the freshers and open marketeers will need tradesmen to service their needs.

And I am certain it will not be hard to explain to young children here that the majority of our best housing stock will always be out of reach because they are allocated to others needed to support our economy.

My concern here is who will benefit the most from this Ponzi scheme argument that we can survive only if we keep growing our population?

Is our economy for the benefit of the island of Guernsey or the islanders who live in it?

I have long wondered if Guernsey is a rock in the Channel or a community of people with a long history and culture who just happen to live here.

Perhaps now is the time for the States of Guernsey to decide once and for all the kind of future we should be planning for.

Perhaps less could be more for our community?

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