Report on housing and social mobility in Jersey published

The Policy Centre Jersey has published a report on the impact of the housing market on social mobility as part of its programme of work on social mobility.

The report concludes that the operation of the housing market has worsened social mobility in Jersey. Those who bought homes many years ago have benefitted from the significant rise in house prices and have been willing and able to use the increase in wealth to help their children with housing costs, in particular to become home owners. Those who have been tenants have been less able to do this and their children have been priced out of the market.

The report notes that housing is not seen as being a key driver of social mobility generally compared with, for example, conditions in childhood and education. However, Jersey’s special circumstances mean that it is relevant, because people have to live close to their work and house prices have increased substantially in real terms.

The report notes UK research findings that the fall in home ownership generally has been far more pronounced among those whose parents are not owner-occupiers. Home ownership and housing wealth accumulation is increasingly associated with parental wealth. This applies more so in Jersey given that house prices have risen faster than in the UK.

The report discusses the important role played by the “Bank of Mum and Dad” in helping people meet housing costs, and particularly to become home owners. But many households are struggling to meet day-to-day costs and are in no position to help children with house purchase. Tenants are more likely to be in that position than owner-occupiers. The most recent Jersey Opinions and Lifestyle Survey found that 46% of social housing tenants and 34% of private tenants found it difficult to cope financially, compared with 14% of owner-occupiers.

The report concludes that there is a two-tier market in Jersey –

• Those who can be helped by their parents to buy housing, those parents having acquired capital as a result of the rise in house prices.
• Those who cannot be helped by their parents to buy housing, those parents having been tenants and have therefore not acquired capital as a result of the rise in house prices.

The report quotes figures from Statistics Jersey showing that the rise in house prices has effectively removed the beneficial effects of tax and benefit policies in reducing income inequality. Income inequality in Jersey is greater than in all but two European countries even before housing costs are taken into account.

The report concludes that the effects of the high cost of housing on social mobility can be addressed in two ways - seeking to reduce the cost of housing or by using tax and other policies to redistribute the gains in wealth that have resulted from the increase in house prices. In practice, the report suggests that the significant real fall in house prices which is currently occurring may well have a favourable effect on social mobility although adverse consequences in other ways. It suggests that measures that merit consideration are giving social housing tenants the right to buy their homes or transferring to them part of the equity of their homes in exchange for them paying a market rent on the remainder.

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