Rental prices 'painful' for average earners

Guernsey's Institute of Directors (IoD) has described the island's rental prices as "painful", leaving little money left over for tenants after paying their rent, food, and bills.

It follows the release of the government's Property Prices Bulletin, which shows the average local market rental price was £2,068 a month in the first quarter of 2025.

That figure is 1.5% higher than the previous quarter, 8.2% higher than the first quarter of 2024 and 51.7% higher than five years ago.

Richard Hemans, the IoD lead on economics, said comparing the figure to the most recent average income data showed renting would cost 55% of a persons salary.

Mr Hemans said rental prices had been a "major driver of inflation" in the island and had increased "much faster than in Jersey".

"The ongoing strength will continue to put upward pressure on local inflation," he said.

"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."

He added: "Given that rental costs have likely outpaced earnings over the last six months, this metric will have deteriorated further."

The Property Prices Bulletin also showed the average price for a local market property was £580,412 at the start of the year, 3.2% lower than the first quarter of 2024.

"The cost of renting a property is still rising fast, whilst the affordability of ownership is improving although still elevated," said Mr Hemans.

"The latest figures confirm what we already know in that we are not building enough homes, which is the key driver of price and affordability pressures.

"This has to remain one of the top priorities for the next States and is fundamental to our social and economic prosperity."

He said 71 new property units were created over the last 12 months and 527 over the last five years, which was "significantly lower" than the target of 310 units per year, or 1,550 over five years.

"Over the last quarter the number of property units fell by five," said Mr Hemans.

"This explains why Guernsey house prices will continue to remain high and strong in the context of full employment, robust earnings, falling interest rates and a growing population driven by positive net migration.

He added: "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 whilst transactions will remain below historic levels."

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