Are Salaries in Real Estate Keeping Up with Inflation?

In 2022, the median real estate salary in the United Kingdom rose by 15%. But how does this relate to price inflation?

In this article, we take a look at how salaries have changed in the real estate industry, and whether or not they’ve kept pace with inflation. We’ll also discuss how the evolution in real estate salaries compare with other industries, and whether our sector is still standing strong despite all the adversity that has emerged in recent years.

How are real estate salaries currently evolving?

In the UK, the median salary for the real estate sector is £57,500 as found by our recent annual salary report. However, this figure can vary considerably depending on experience and location.

Overall, the median UK salary for 2022 increased by a huge 15% (£7,500) from last year, which represents one of the largest percentage increases in over two decades. In addition, 56% of professionals working in the real estate industry were given a salary raise in 2022.

This is largely due to the pandemic putting pay reviews and promotions on hold for many employees over the past two years. Plus, with the job market recovery, many employers are making up for the lost time by awarding salary rises to their employees.

For those who have moved to new employers, or received a counter-offer after intending to resign, the average salary uplift was even higher, sitting at 18%. This goes to show that the current job market is very much candidate-led, with employers needing to offer increasingly competitive salaries to attract and retain the best talent.

While the gender wage gap decreased slightly from last year to 25.7 percent, we’re still a long way from returning to the levels we saw in 2017 (22.6%). We wonder how much this will affect the gap in future years, as women are more likely to want work flexibility. As flexibility and change in working hours are the only variants negatively affecting earnings in the real estate sector, it may take longer for the gender pay gap to close depending on how the industry wants to work around pay if offering permanently offering hybrid or remote work.

However, as a whole, the picture paints an industry is doing relatively well. We explore how this compares to inflation rates and other sectors below.

The Macdonald & Company Salary, Rewards and Attitudes Report 2022

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.

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