Policy & Resources President comments on closing the gap between earnings and house prices

Monday 08 April 2024

The President of the Policy & Resources Committee is commenting further on his ambitions for reducing the severity of the Island's current housing challenges.

Responding to questions recently on a media podcast with the Guernsey Press, Deputy Lyndon Trott commented on how the current average house price is more than 15 times median earnings, amongst the highest in Europe, and in his view 'completely unsustainable'.

On the podcast (which is available in full on the Guernsey Press website) as part of a broader discussion on housing, Deputy Trott said it was unrealistic to expect the ratio to fall to the very low levels seen several decades ago, but if the ratio could return to closer to 9 or 10 times median earnings, it would be a positive outcome and align us more closely to other western European countries including France, Germany, Luxembourg or Switzerland. However, in light of some of the political and public reaction over the weekend, Deputy Trott is looking to ensure his comment is not misunderstood as a target, or pointing to any specific policy for reducing existing house prices and negatively impacting homeowners.

Deputy Trott said:

'There are a number of ways in which we could improve the affordability of house prices without creating shocks or damage to the housing market, and not least is increasing median earnings. If we continue to see good economic growth with people earning more, if wages begin to rise faster than house prices, that on its own would improve affordability.

Coupled with that, we must progress full speed with some of the key housing developments the States are involved in, which could increase supply at the lower end of the market and provide some specific social and intermediate housing which is also badly needed. Making progress in these areas will help address some of our housing challenges, and may move us gradually towards a more affordable average house price.

Certainly, as I said on the podcast, we do not want to see a dramatic fall in house prices, which would only be the result of our economy declining significantly through some unforeseen external development, because right now our economy is in a very strong position after two years of good growth.

We're working with colleagues in Environment & Infrastructure and Employment & Social Security to explore carefully what other measures we can pursue to address our housing challenges, informed by expert advice and the Guernsey Housing Plan.

I am not one for making policy on-the-hoof and I very much hope my comments on the podcast are not interpreted that way. I am also known for being open and transparent with my views and not ducking questions, which is why I responded on this topic when asked by the Guernsey Press. I hope people don't take those comments out of context and would encourage them to listen to the full podcast.

So to be clear, my focus and the focus of my colleagues on the Policy & Resources Committee is to support economic growth wherever and whenever possible, and to see earnings increase and living standards improve.'

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