Can’t afford a house in the UK – how about an island instead?

With the rising cost of property in the UK and interest rates still being slower to come down than elsewhere, buying a house now could seem even more of a pipe dream for many people than before. 

UK house prices have been rising at the quickest yearly rate in almost two years. According to Nationwide, house prices increased 2.4% in the year up to August 2024. 

As such, instead of a house in the UK, could you be better off buying an entire island somewhere exotic? You may be. 

According to a recent study by CasinoApps.com, the average UK house, with three bedrooms and 828 square feet, is likely to set buyers back around £284,691 (€337,682.27).

On the other hand, the islands included in the study, which are cheaper than the average UK house, are 1 acre or 43,560 square feet large at minimum. These are spread out across places like Canada, Panama, Finland and more. 

Neil Roarty, content lead at Casino Apps, said in the report: “The data shows that it is becoming increasingly difficult for young people and first-time buyers to make their way into the industry due to a surge in the prices of average properties. 

“For many of our youth, the thought of ever outright owning their own home is simply the stuff of dreams. Low interest rates on savings accounts have played a big factor and renting is leaving young people trapped. 

“The cost of living increased dramatically in the UK following the Covid-19 pandemic across 2021 and 2022, with the annual rate of inflation peaking at 11.1% in October 2022- a 41-year high.”

Which islands can you buy for cheaper than a house in the UK?

One of the islands cheaper than the average UK house and several times more spacious, is Blowfish Island, in Panama, priced at £61,807 (€73,175.51). At six acres, or 261,360 square feet, the mangrove island is near the better-known Isla Popa and within easy reach of the Bocas del Toro town. 

Ideal for sustainable living, Blowfish Island is a Rights of Possession island, which under Panama law means that buyers can possess government-owned land, as well as make changes or improvements on it. Foreigners are also eligible to buy this kind of land. 

La Cornelia Island, in Nicaragua, can be bought for £70,413 (€83,373.99), according to the study. This island is relatively small at 1 acre or 43,560 square feet, and is part of Las Isletas de Granada, in Granada, Nicaragua. 

At present, the island has not been developed, providing a blank canvas for the perfect dream house. Electricity is also available, if needed, along with a lush array of fruit and palm trees. 

Another island which is cheaper than the average UK house, as well as being much closer to home, is Teerisaari, in Finland. Priced at £115,973 (€137,580.51), this long and thin island has quite a bit of space, at three acres, or 130,680 square feet. It is placed within Lake Visuselkä, near the town of Virrat. 

Only 70 metres wide at its widest, the island has stony shores, an abundance of native woodland, while the lake boasts a variety of fish. However, buyers may be required to make more enquiries regarding how much construction can be made on the island. 

Wild Cane Key is another Panamanian island cheaper than a house in the UK, selling for £140,827 (€167,084.30). This island, also located in Bocas del Toro, is 3.4 acres or 148,104 square feet big. 

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It has several building spots, as well coconut palms, a bay inlet and coral reefs. It can be most easily accessed by helicopter, but can also be reached by boat when sea conditions are calm. 

Apart from Teerisaari, Finland also has another private island which could cost you less than a UK house, called Talassaari. At six acres or 261,360 square feet big, the island is priced at £163,452 (€193,912.10). 

Talassaari, located in Rautalampi, in the Linnansalmi Lake, is only 400 metres from shore. It has a lush tapestry of trees and a log cabin for a holiday home, which has a cellar, a storage warehouse, as well as extra building rights, in case the property is expanded in the future. 

If you fancy a colder climate, there is also a Canadian island which is cheaper than the average UK house. Lac Echo Island, priced at £273,831 (€324,972.90), is another lake island, located on Lake Echo, within 45 minutes of Montreal. 

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It is 2.28 acres, or 99,316 square feet, with an abundance of pine, fir and cedar trees, with some over a 100 years old. The island is ideal for off-grid living, but also has electric connections available, along with options to build accommodations like guest houses and single-family homes. 

Why are house prices in the UK on the rise?

UK house prices have been increasing for a number of reasons, including rising demand due to a boom in population and single-person households. There is also a shortage of housing supply which pushes the prices up.  

Planning and building restrictions in several parts of the country have also slowed down the building process further, while surging land prices have added to higher rents. 

Although the temporary relief on Stamp Duty Land Tax (SDLT) meant that first-time buyers have been given some breathing space over the past couple of years, this relief measure is expected to end on 31 March 2025. 

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Following this, the nil-rate threshold will go back to being £125,000, down from the current £250,000. This means that buyers of all residential properties worth £125,000 and above will have to pay stamp duty. 

Similarly, for first-time buyers, the nil-rate threshold will go back to £300,000, down from the current £425,000. 

Stamp duty relief set to end

Regarding the looming end of the stamp duty relief measure, David Hannah, group chairman of Cornerstone Tax, said: “The decision from the government to lower stamp duty bands shows a concerning deficit of joined-up thinking. 

“Does this Chancellor and Prime Minister not understand that if they want 1.5 million new homes, they cannot drive landlords out of the market, incur additional charges for first-time buyers and freeze up working capital for developers – which can only be available if these homes are selling.

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“These former two measures have further deterred market entrants and if I were a builder, I’d be freezing development until there’s a ready market.

“The government’s proposed changes act as a reminder of the Development Land Tax, a measure from the 1970s levied on landowners who created value on unused land. At its height, developers were paying 80% on gains and it decimated construction in this country. The lesson learnt is straightforward. You can’t incentivise development and growth through penalisation and taxation.

“Moreover, I expect stamp duty receipts to fall significantly, then to flatline in Q1 2025, potentially plunging the British property market into a desperate situation. In essence, reducing stamp duty thresholds means that it will ultimately be the consumers who foot the bill.”