Isle of Man Property – Why Is It So Expensive?

Do you know what the average property price on the Isle of Man is? As of now (July 2011) the average cost of an Isle of Man property is around £270,000! Don’t panic though because if you’re a first time buyer then you can pick up a bargain for between £180,000 and £240,000 – that’s right, property up to £240,000 is advertised as for first time buyers when the average salary on the island is around £25,000. Or to put it another way more than 9 times annual salary. So why is Isle of Man property so expensive?

In short much like all property markets it comes down to supply and demand, however the island has a couple of nuances that don’t help things.

First of all there is the situation regarding stamp duty, capital gains tax and inheritance tax, or to be more precise the lack of it. Isle of Man property is a great investment and when you add in the benefits of having a local address there is a booming trade in new build flats…or rather there was. As these aren’t aimed at first time buyers but rather investors you could charge what you like for them. This is what happened and as a result there are many new developments on the Isle of Man that are either empty due to stupid prices (builders haven’t been able to get their head around the fact the party is over) or because they were bought by people who may only use them a couple of weeks a years. For example friends of ours recently returned to the island after working abroad and decided to rent before settling permanently into a house. In one of the most luxurious apartment developments on the island, out of 16 apartments only 2 had people living in them! The rest? Well I’m sure they make a great address for somebody looking for a Manx address to put on their CSP forms.

The second issue is that of the type of person moving to the Isle of Man. Is there a subtle way of putting this? Probably not, rich retirees. People retire to the Isle of Man, that’s why there is still plenty of movement in the upper middle and above priced properties. It’s a great place to retire for many reasons. This keeps those property prices in a certain range which drags the bottom up. People moving from their first or second home to their second or third are competing with people looking for a comfortable retirement castle. The only way to compete is to get as high a price for your existing house as you think you can and bridge the gap. Except they’re not selling. In the last few years the number of house sales at the lower end has reduced enormously. Look what you’re getting for your money, who in their right mind is going to pay £220,000+ for a 3 bed, 1 bathroom thrown up new build semi? Yet if you want to move into that £270,000 second home how can you possibly bridge the gap unless you’re within 40 or 50 thousand pounds?

And this is why I think Isle of Man property prices are so high, essentially you have a situation where certain types of property are selling for very high prices whilst everything else remains fairly stagnant. Imagine if only 2 houses sold on the island this year, 1 for £1,000,000 and the other for £500,000, the average house price on the Isle of Man would be £750,000. The chances are of course that demand will subside (more than likely as a result of tax changes on the island) and the market will re-balance inline with average earnings. The question then of course will be do you really want to buy Isle of Man property?

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