The Guernsey Residential Property Prices Bulletin has been published for Quarter 2 of 2024.
The mix adjusted average purchase price for the Local Market properties transacted during the second quarter of 2024 was £587,673; 2.0% lower than the previous quarter and 2.2% lower than the second quarter of 2023. The four quarter average was 43% higher than five years previously.
There were 145 Local Market transactions during the second quarter of 2024, 52 more than the previous quarter, but 30 fewer than the second quarter of 2023.
The four quarter rolling average time between a Local Market property becoming available for purchase and its subsequent sale was 202 days for properties purchased in the second quarter of 2024, compared with 159 days in the second quarter of 2023.
The difference between the maximum advertised prices compared with the final sale prices of Local Market properties increased this quarter. The final sale price was, on average, 8.9% lower than the maximum advertised price in the second quarter of 2024, compared with 6.9% a year previously and 6.4% in the second quarter of 2019.
2.1% of Local Market purchases during the second quarter of 2024 had been built in the previous twelve months. This compares to 3.4% in the second quarter of 2023.
The raw median price (realty only) of the nine Open Market transactions in the second quarter of 2024 was £1,803,750, compared with £1,633,125 in the second quarter of 2023.
The mix adjusted average rental price for Local Market properties was £1,971 per calendar month in the second quarter of 2024; 3.1% higher than the previous quarter, 5.7% higher than the second quarter of 2023 and 45.9% higher than five years previously.
Response to the Bulletin from the Guernsey Institute of Directors:
Richard Hemans (pictured), IoD Guernsey’s lead on economics, commented: “The latest property statistics show that the housing market is still very weak with both prices and transactions declining. However, there are no signs of distress and it seems that the market continues to normalise after an unprecedented period of activity during the Covid years.
“Local market property prices decreased by 2% year on year in Q2 2024 and have now been declining since Q3 2023, when prices were 9% higher than now. However, the latest four-quarter rolling average price was the first drop since Q2 2018 and prices have increased by 47% during those six years.
“The market has been incredibly strong because of the pandemic and the price correction is in many ways a normalisation of the market. Transactions declined by 17% versus Q2 2024 and it is likely that number of transactions for the full year will be below 500, which will be the lowest total this century. Again, this must be seen in the context of the pandemic that distorted the market – the number of transactions in the last five years was 4,025, which is 17% higher than the previous five years. It is likely that the market is pausing for breath, but its current softness will have negative implications for estate agents and other sectors that depend on the property market, and it will lead to lower tax revenues and possible challenges for those looking to sell their properties. Fortunately, the large fall in the number of transactions and the smaller decline in prices indicate there is no financial distress..
“The open market suffered a 9% decline in prices, but they are still 30% higher than five years ago. Transactions were the lowest on a four-quarter rolling basis since 2017, but the number of transactions over the last five years was 68% higher than the previous five years. Again, it seems that the open market is also normalising.
“The price of rentals continued to increase, rising by 5.7%. Whilst the pace of the increases in rent is falling and it will start to exert downward pressure on inflation, rent will have contributed significantly to, and remains above, local inflation, and the level of increases underlines the shortage of properties available and the strong demand for them. Rent remains relatively unaffordable for those who are not property owners, consuming a painful 55% of average earnings and leaving little money available for other expenditure. Rental yields of 3.8% underline how expensive rental properties are, which makes investment in the sector unattractive unless there are further capital gains that would put further pressure on tenants.
“There are some signs that the market is stabilising. The affordability ratio for house purchases to earnings has fallen to 14.5 times, which is still high but is improving. If earnings rise by 5% in the year ahead and house prices remain flat, the ratio will be below 14. The discounts that sellers are accepting for their property is steepening, showing they are becoming more realistic if they want to sell their property. The gap has widened between the last asking price recorded and the maximum asking price recorded, suggesting sellers are actively reducing the asking price of their properties to secure a sale.
“The outlook for the housing market is finely balanced in terms of its next move and it is likely that the current softness will continue in the short term. One of the key questions is has the price of properties fallen far enough to stimulate the number of transactions? High levels of employment, a growing population and the fall in interest rates will continue to support the housing market, but the supply of housing needs to increase to support the economy and our society. The open market may receive a boost from the new Labour government. The cost of owning and renting a property in Guernsey is very high, and the supply is restricted, so the States of Guernsey must continue to focus on addressing this urgently.”
Response to the Bulletin from Savills Guernsey:
Nick Paluch, director in the residential sales team at Savills Guernsey, said: “Now the UK general election has taken place it should lead to greater stability in the Open Market. If previous election cycles are anything to go by we could start to see greater numbers of people looking to buy and sell, which will hopefully lead back to more historically normal transaction levels. We could also see a knock on effect following changes that will see UK ‘non doms’ paying more tax from next year. This could potentially make jurisdictions with benign tax environments – such as Guernsey – more attractive. To some extent that has already been happening. Even before the election we were seeing a greater number of enquiries from those looking to relocate.
“The Bank of England’s recent cut to the base rate should also add fresh impetus and – assuming that saving is passed to homeowners – there should be interest and activity across the Local Market. Of course, it will take time for increased activity to translate into completed sales, but underlying sentiment is strong. Despite some short term fluctuations, property prices over the long term are relatively stable. Buyers are still having to align their expectations with what they can afford, but market confidence is beginning to grow and there appears to be more momentum – as seen by the increase in Local Market sales in the last quarter.”
Kelsey Gerrard, lettings negotiator at Savills Guernsey, said the increase in monthly rental prices was driven by a lack of available properties. “The figures are reflective of what we’re seeing on the ground,” she said. “Demand continues to be high and the number of tenants looking outweighs the number of available properties. That’s especially true for the Open Market, but it’s a very similar picture in the Local Market. Competition is strong and all properties that come to market are letting quickly. Consequently, rental prices have risen, with no particular signs of a drop off. Two bedroom properties in particular seem to be in highest demand and also centrally located properties. This has largely been driven by people who will be relocating for work over the summer, primarily teachers and healthcare workers.”
