The gov’s annual housing report has admitted that home ownership is will be hard to achieve for young workers as prices outstrip wages.

Young People and Affordability

It is no secret that home ownership for young Manx workers is somewhat difficult as high rents curtail savings and house prices only even seem to increase far quicker than wages.

The gov’s report says: ‘One way to measure long term affordability of housing is to show average house prices as a multiple of average earnings. In 2020 average house prices were 7.58 times average annual earnings, whilst median house prices were 8.79 times the median full time salary. Over the longer term prices are higher relative to earnings than they were during the 1990’s but lower than they were in most of the last decade.’

The market needs new people to be joining it as it helps others move through the system, but ultimately the figures shown in this report show it is no closer to a reality for many people.

If the maths lesson outlined below isn’t to your liking, the report spells out the problem for young people living on the island ‘home ownership will remain difficult’. To put this in context, in 2020 the lowest quartile house price was 9.81 times the median salary for a person aged 25 and under, this drops to 4.9 times if calculated on the basis of two people buying together. Again while this is bad news for the island’s young people, it is also bad news for the island as a whole with property ownership seen by the gov as ‘allowing young people to establish themselves on the island’, in other words, stay here and not seek greener pastures.

House Prices

Over half all houses sold on the island in 2020 were in the £250,000 to £500,000 price range, a significant increase on the year before.

The gov has published its housing market review for 2020 which saw the average property sale reach £285,064, an increase of 7.2% over the year.

The report shows that the average house price in 2020 was £313,036, which was an increase of 7.4% on 2019 with the median house price rising by 6.9% to £283,250. While there will be many reasons, not least the pandemic, behind this, the increase is the biggest and steepest in a decade.

However, it is the distribution of house prices that is most concerning for those seeking to get onto the property ladder. While in 2016 over 50% of houses which were sold on the island were valued at below £250,000, this has fallen each year since and in 2020 made up under 40% of sales. In this same period the percentage of houses being sold in the £250,000 to £500,000 range has risen from about 45% in 2016 to 51% in 2020. 

Throughout the same period, the percentage of homes which have been sold for more than £500,000 has doubled. In 2016 this bracket made up around 6% of house sales, rising to 12% in 2020. Meanwhile the percentage of properties sold for more than £750,000 increased from 3% in 2019 to 4% in 2020.

Flat Prices

While house prices rose sharply in 2020, the flat market is harder to judge. The average flat price in 2020 was £153,563, which is an increase of 0.7% over the year, however the median flat price was £147,000, which is an increase of 6.9% compared with 2019.

There were fewer total flat sales in 2020 compared with 2019, returning to levels previously seen in 2016 and 2017. However, there has been an upward shift in properties being sold over £150,000, with £100,000 to £150,000 now accounting for 28% of sales compared to 22%, with flats priced between £200,000 and £250,000 accounting for 10% in 2020 compared to 8% for 2019. However flats within the £100,000 to £150,000 still account for the largest share of sales, at 35%, although this is down from 41% in 2019.

You can see the full report below:

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