Average rental prices approaching £8,400 a year more than they were five years ago

Richard Hemans, IoD Guernsey’s lead on economics, comments:

‘Guernsey’s local market property prices rose again in Q2 2025, with the mix-adjusted average now standing at £596,573 — up 2.8% on the quarter and 1.5% higher than this time last year. However, underlying prices remain weak, with the four-quarter rolling average down by 2%, only a slight improvement from the 3% decline reported in Q1 2025. Jersey’s housing market is even more subdued, with its rolling four-quarter House Price Index down by 6% compared to Q2 2024. In real terms, prices are likely declining faster than these headline figures suggest, given that inflation remains elevated.

However, this softness in prices is translating into strength in market activity in both islands. There have been 714 local market transactions in Guernsey over the last 12 months, representing a year-on-year increase of 36%. If anything, activity is accelerating, as growth was 19% in Q1 2025. Jersey saw year-on-year growth of 24%. These rising transaction volumes alongside modest price falls suggest increased liquidity and a market that is still normalising post-pandemic.

Guernsey’s open market remains very robust, with both prices and volumes growing strongly. Open market prices rose by 16% on a rolling four-quarter average basis, while the number of transactions increased by 50%. Guernsey is clearly maintaining its appeal as a destination for high-net-worth individuals, likely driven by its stability, quality of life, and tax environment.

Rental costs continue to climb. Guernsey’s mix-adjusted average rent rose to £2,075 per month, up 7% on a four-quarter rolling basis. Rental costs remain painful, consuming a significant proportion of average earnings, and stand in stark contrast to Jersey, where rents have fallen 0.5% year-on-year. Rents are likely rising faster than wages in Guernsey, pushing housing costs further out of reach for many and contributing to the island’s persistently high inflation rate. Housing unaffordability may increasingly restrict labour mobility and act as a brake on productivity and economic growth.

On affordability, Guernsey’s median loan-to-value (LTV) ratio sat at 79%, higher than Jersey’s median of 73%. This reflects the need to borrow more in Guernsey to purchase a home, indicating that homebuyers may be more indebted and have less equity in their property. It may also reflect reduced household savings buffers, as renters struggle to accumulate deposits amid persistently high rental costs. However, this figure does not tell us about the affordability or risk profile of those loans, since this data has not been updated since Q2 2024.

Supply remains tight. Over the past 12 months, Guernsey’s housing stock increased by just 88 units, with a net gain of only 17 in Q2, falling far short of the annual target of 310. While population growth and net inward migration have previously been cited as major contributors to housing demand, recent government analysis suggests that these figures may have been overstated due to under-reported outward migration. Revised statistics are expected to reduce the total population estimate by up to 3%. Even so, rents and prices continue to rise, suggesting that supply constraints remain the dominant force behind affordability pressures.

Looking ahead, easing interest rates may improve access for committed buyers. Yet without accelerated planning reform, expanded housing committee action and the rapid scaling of supply, especially affordable and social units, price pressures and rental inflation will remain structurally entrenched. While Jersey’s housing market also remains relatively unaffordable, falling prices to buy and to rent suggest that a stronger supply response may be helping to ease pressure. Guernsey’s experience also underlines the need for accurate and timely population data to inform housing policy and build public trust.’