Are Salaries in Real Estate Keeping Up with Inflation?

How does this tie in with inflation rates?

In February of 2022, the annual rate of inflation in the UK rose to 6.2%, up from 5.5% in January and above market expectations of 5.9%. It is the highest inflation rate since March 1992, as rising energy and food costs continue to squeeze household budgets.
To keep up with inflation, salaries would need to increase by a similar percentage. As the salaries in the real estate sector have increased by an average of 15%, salaries have more than kept up with inflation rates.

Why? Although there are fears for the economy at present, real estate is currently in a period of strong growth, with activity and transaction volumes rising across the country as companies confidently push ahead with plans previously held back.

At Macdonald, we have seen an upturn in organisations – from developers to investors – seeking new talent and wanting to grow their teams to aid growth plans. This competition for the best candidates is seeing higher salary offers, and competitive counter-offers.

How do real estate salaries compare to other industries?

As the costs of energy and food are expected to continue to rise, inflation is expected to remain high and continue to rise, throughout the year, too. This is bad news for many workers, as their salaries are not increasing at the same rate. According to The Office for National Statistics, the average earnings of the UK workforce have experienced a growth of 5.4%, which is far below the current rate of inflation. The risk is that this gap will continue to grow, leaving many workers struggling to keep up with the rising cost of living.

This means that, in real terms, salaries in most industries are not keeping up with inflation and are decreasing. This is a trend that is likely to continue, as employers are unlikely to be able to afford to increase salaries at the same rate as inflation.

The real estate industry is one of the few exceptions to this trend. Thanks to the strong growth in the sector, salaries in real estate have been able to keep pace with inflation. Many other industries have been hugely impacted by the pandemic, with many workers facing pay cuts or even losing their jobs.

This includes industries like hospitality, retail, aviation, and many more. Many businesses in those industries have not only had to contend with the pandemic, but also with the effects of Brexit. This has created immense pressure, meaning these sectors have been unable to increase salaries at the same rate as inflation. With many facing an uncertain future, it is unlikely that they will be able to do so shortly, and may have to face more cuts to survive.

The real estate sector has been much more resilient and came out relatively unscathed, which has helped to protect salaries and provide job security for those working in the industry. So, if you’re looking for an industry where your salary is likely to keep pace with inflation, then the real estate sector is worth considering.