With the cost of living rising, inflation at its highest rate in decades and property prices soaring, the Channel Islands face a challenge to recruit the young professionals that the future of its businesses will depend upon. And a pending housing crisis is at the root of the problem
It is now predicted that 59% of the global workforce is made up of Millennials and Gen-Z – a key demographic for the Channel Islands’ thriving finance industry.
But the ever-increasing cost of property on the islands, coupled with inflationary pressures, are making living here increasingly challenging for the next generation of professionals.
That could have a negative impact on the ability of the islands’ businesses to recruit and retain new talent, and to build teams with diverse skillsets from a range of socio-economic backgrounds.
Ellie Jones, CEO of Guernsey-based equal rights charity Liberate, says rent on the islands has been pushed to a level that’s making it unaffordable for many working people, particularly those employed in industries such as retail and hospitality.
“Because wages aren’t growing at the same rate as inflation, the cost of property for your average person here is just unsustainable,” she says. “Often, people are having to pay more than half their wages in rent each month.
“Mortgages are also pushing people to their limits. A friend of mine, who’s an accountant, was recently offered a mortgage. He worked out that if the mortgage rate went up by more than 1%, he wouldn’t be able to feed himself. He turned it down.
“I feel like we’re waiting for a crisis to happen for a lot of people who have stretched themselves to the limits of what they can afford.”
Additional pressures
While young professionals continue to grapple with the rising cost of living, the Channel Islands are also experiencing a shortage of affordable homes as a result of more people returning to the islands during the Covid-19 pandemic.
“This has just pushed prices through the roof, because there’s not enough stock to keep up with demand,” says Jones. “I think it’s forcing a lot of people into work poverty. I’ve got absolutely no idea how anybody who works in certain sectors can even afford to rent a home here, never mind dream of buying.”
The islands’ finance industry remains strong, with many young professionals in the sector looking to move to or return to the islands in order to develop their career.
Edward Jones, Head of Lending for the Channel Islands at Butterfield, points out that unemployment in the islands is low, particularly in the thriving finance industry, and that wages in many circumstances have risen accordingly.
Some are worried that the rising costs of fuel and energy – along with stagnating wages – could widen the gap between those working in different sectors.
“We’re going to end up with this complete disparity between the rich and the poor,” says Ellie Jones. “There’s going to be no middle ground. The working people in the middle-income bracket, who don’t yet own a property, are going to leave. It’s just a disaster waiting to happen.”
Cost of island living
The impact, she continues, could be catastrophic for many of the islands’ supporting businesses – and the wider economy of the Channel Islands.
“The effect will depend on the type of business,” she says. “People in the finance sector, for example, can afford to pay these rents, and employers often cover the costs for staff to relocate and live here, which pushes the costs up for everyone else.
“If you look at the hospitality sector, which is struggling with rising costs anyway, many businesses are closing or reducing their business hours.
"They’re also struggling to get staff as people working in that sector just can’t afford to live here. If people can’t afford accommodation of a decent standard, why would they choose to come and work here?”
Even for the thriving finance sector, rising costs could impact the long-term viability of living on the island for young professionals, particularly if other businesses are being forced to close or are unable to recruit skilled, diverse teams.
The end result of reduced quality of life could have a much wider impact, felt across the islands and beyond.
So, where does the answer lie? And what steps can be taken to curb the unprecedented prices currently being seen in the islands’ property markets?
For Ellie Jones, action needs to be taken to address both spiralling rents and the often prohibitive price of homes.
“First, something needs to be done about rent control,” she says. “There needs to be a limit on the maximum amount of rent that somebody can charge per square footage.
"The problem, however, is that if that’s implemented now, it would have to be based on current rates, which are already very high.
“It wouldn’t have much impact, but something needs to be done. At the moment, it’s hard to find a two-bedroom place to rent in Guernsey for under £2,000 per month. We have lots of protection for landlords, but no protection for renters.”
She adds: “We also need affordable new housing for people who are not on the property ladder. That shouldn’t be restricted to first-time buyers.
“There are so many people who have bought property and then either had to sell it at the wrong time or couldn’t afford their mortgages.”
Edward Jones of Butterfield agrees that affordable housing must remain a priority in the coming years. “At Butterfield, we focus primarily on mortgages and owner-occupied facilities, but the issue of affordable housing is key,” he says.
“There are a number of different applications under way, certainly in Guernsey and Jersey, for planning more affordable housing, and private profit opportunities for certain residential apartment blocks.
“I think that is a positive thing for the island in increasing affordable housing, creating more modern structures, attracting a younger workforce and enabling them to stay on the islands.”