DURING 2024, we wrote about the continued “bean drain” of working-age Islanders leaving, as high house prices and the rising cost of living were making it increasingly difficult for working families to make ends meet around a comfortable life. We think this is a problem which is set to accelerate.

“ One of the biggest issues is the cost of housing. With an average threebedroom house costing £800,000, a married couple needs to comfortably earn over £100,000 per annum to be able to afford to purchase. If this couple has young children are young, sky-high childcare costs are also likely to be an issue.

With reduced aspiration, it is possible to cram the two children into a two-bedroom house, at which point the average purchase price falls to £565,000. The trade-off is a more stressful family life where the hoped-for relief around space might come in the form of an added financial burden when one of the children goes off to university.

Unless aged 45-49, with at least one of the parents working in finance, IT or civil service management (the highest average salary career choices), the couple in question is unlikely to meet the criteria required to be able to afford a mortgage. This is because younger age groups have lower average earnings and have had less time to save the required deposit. Average salaries fall dramatically if your career choice is within health, education, hospitality or retail, making it all but impossible to own a three-bedroom house without some help.

This is where the article gets awkward. “Help” might be in the form of an inheritance from parents passing away, something which is likely to become more prevalent given the ageing population. Given the rise in Jersey property prices over the past 30 years, we expect to see an explosion in the bean drain among key workers, with this exodus driven by windfalls from the property market.

Take the example of Jenny (name changed out of courtesy) a nurse, earning £44,587, married to a teacher, earning £51,530, giving a combined salary of £96,117 before deductions, tax and childcare costs.

According to Peter Seymour of The Mortgage Shop, the maximum they are likely to be able to borrow, assuming they have two children, are both under the age of 40, are paying 15% ITIS and have a 10% deposit, is £419,600. It is a struggle to get on the housing ladder and retain any quality of life. If they cannot afford to buy and therefore rent, there is a sense of not having firm roots. Either way, it is easy to see why they may feel that they are on a treadmill.

Jersey’s Better Life Index aims to provide a measure of the Island’s wellbeing. It is based on social, environmental and economic measures and, according to Statistics Jersey, ranked Jersey 26th out of 41 nations in 2023. This places Jersey below the Organisation for Economic Co-operation and Development average, below the UK and France. In terms of work-life balance, Jersey ranked a lowly 32nd out of 41 nations (Better Life Index report 2023.pdf). Access to affordable housing is central to this.

Jenny’s parents bought their average house in Jersey in the 1970s for £40,000. Both are now in their late- 70ss and are in extremely poor health. Their house, even though it is in need of repair, will probably sell for £750,000. As they have no mortgage, and this is their only real asset, Jenny and her sister will each inherit £375,000 when the inevitable happens. This will be a life-changing moment in many ways and will trigger a period of reflection, as it always does when a loved one passes away. We all reflect on our own mortality and rethink the future.

While £375,000 is a significant economic boost, it is not quite enough to buy a house and live comfortably with two children in Jersey. It is, however, more than enough to buy the average three-bedroom house in the UK (£282,706) and live mortgage-free with savings to spare while Jenny and her husband work out their time to retirement in a more leisurely way.

The huge rise in Jersey house prices in the past 30 years will provide a windfall, even if unwelcome, to many key workers over the next ten years as elderly parents pass away. This will compound labour shortages in some important areas of the economy, as some reassess their work-life balance and decide to move away from Jersey. It will also drive further inflationary pressure as employers, mostly the government, which is funded by our taxes, competes to attract new staff into the Island and keep them despite the dire housing situation that they will have to cope with.

Tinkering at the edges of the affordable housing problem is not going to be enough. Radical action is required to prevent a much bigger problem developing.

" The huge rise in Jersey house prices in the past 30 years will provide a windfall “