Why an Average Family Cannot Afford an Average Home in Jersey

Historical Archive

This article is preserved as part of the historical record of this blog. It reflects the author's views at the time of publication. The content has not been substantively altered, although the HTML, accessibility and formatting have been updated to meet modern web standards.

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Introduction

In order to ensure a satisfactory standard of living, it is essential that an average family can afford to purchase an average family home.

The Affordability Gap

At the time of writing, typical lending criteria used by banks were:

• Maximum lending of five times the annual salary of the main earner.
• Plus one additional annual salary from a second income.

With an average annual salary of approximately £32,448, the maximum borrowing available to an average household was around £195,000. Assuming a 10% deposit, an average family home should therefore cost approximately £215,000.

In reality, however, the average family home in Jersey cost around £435,000 — roughly double what an average family could reasonably afford.

Whilst many people regard this simply as a failure of Government, I believe it is more accurately the result of Government policy. The following examples illustrate some of the mechanisms that, in my view, artificially inflated house prices.

Income Support

Accommodation payments made through Income Support establish a baseline for rental values across the housing market.

At the time this article was originally written, Income Support paid £661 per month towards accommodation for a single person occupying a one-bedroom property.

A private investor purchasing a property valued at approximately £150,000, with a 10% deposit and a mortgage interest rate of 4%, could expect those rental payments to cover the mortgage if the property was let to a tenant receiving Income Support.

It may therefore be no coincidence that many of the smaller apartments constructed in Jersey appeared to fit precisely within this investment model. Such developments were, in my view, designed primarily for investment purposes rather than to increase the supply of suitable homes for families.

0% Capital Gains Tax

The absence of Capital Gains Tax in Jersey provides an additional incentive for property investment.

Under the investment model described above, investors are able to sell their properties in the future and retain any capital gains free of tax. The result is continued investment demand that helps underpin property values, including for properties that many people would regard as offering relatively poor value.

Together, Income Support and the absence of Capital Gains Tax help to establish a floor beneath the Jersey property market by supporting demand at the lower end of the housing ladder.

In the second part of this article, I examine additional Government policies that, in my view, continue to sustain high house prices in Jersey and consider the likely future direction of the housing market.

References

1. Government of Jersey, Average Earnings Report.
2. Government of Jersey, Income Support Rates.

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Historical Archive Update

This page was updated on 27 July 2026. The content has been preserved as originally published. This update was undertaken solely to modernise the HTML markup, improve accessibility, correct obvious spelling mistakes and grammatical slips, update obsolete links where appropriate, and bring the page into line with current web standards.