The Guernsey Residential Property Prices Bulletin has been published for Quarter 3 of 2024.
The Guernsey Residential Property Prices bulletin measures average price changes in residential properties purchased and advertised as being available to rent on the island each quarter and provides a headline analysis of trend prices.
The mix adjusted average purchase price for the Local Market properties transacted during the third quarter of 2024 was £609,723, 3.8% higher than the previous quarter but 5.9% lower than the third quarter of 2023. The four quarter average was 40% higher than five years previously.
There were 165 Local Market transactions during the third quarter of 2024, 20 more than the previous quarter, and 27 more than the third quarter of 2023.
The four quarter rolling average time between a Local Market property becoming available for purchase and its subsequent sale was 221 days for properties purchased in the third quarter of 2024, compared with 164 days in the third 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, 7.2% lower than the maximum advertised price in the third quarter of 2024, compared with 5.9% a year previously and 6.9% in the third quarter of 2019.
0.6% of Local Market purchases during the third quarter of 2024 had been built in the previous twelve months. This compares to 7.2% in the third quarter of 2023.
The raw median price (realty only) of the 16 Open Market transactions in the third quarter of 2024 was £1,958,288, compared with £1,443,438 in the third quarter of 2023.
The mix adjusted average rental price for Local Market properties was £2,054 per calendar month in the third quarter of 2024, 4.2% higher than the previous quarter, 7.6% higher than the third quarter of 2023 and 47.5% higher than five years previously.
Richard Hemans, IoD Guernsey’s lead on economics, commented: “It may be too early and brave to identify the bottom of the latest housing market cycle, but the latest property statistics suggest that it may be starting to recover after reaching its trough in Q2 2024, with both prices and transactions increasing quarter on quarter. However, the most insightful element of the latest bulletin is the inclusion of new data on the supply of housing in the island, which shows that simply not enough housing is being created to meet demand.
“Local market property prices decreased by 6% year on year in Q3 2024 and have now been declining since Q3 2023, when prices were 6% higher than now. They did increase quarter on quarter nonetheless, and when the large quarterly decrease from Q3 2023 drops out of the calculations in Q4 2024, it is likely that the price change for the full year of 2024 will be flat to a small decline. It is also important to remember that local market house prices are 40% higher than they were 5 years ago.
“Q3 2024 transactions increased quarter on quarter and against the same quarter in 2023. The four quarter rolling average number of transactions fell by 9%, which was a significant improvement on the 25% decline reported in Q2 2024. The transaction trend has been improving since the first quarter of 2023 and it now seems that the number of transactions for the full year will be around the same level as 2023 when it previously looked like they would struggle to exceed 500.
“The open market recorded a 1% increase in prices, and they are 43% higher than five years ago. The number of four-quarter rolling open market transactions declined by 32% against last year and are 33% lower than their pre-pandemic level. The new Labour government and its first budget could lead to higher transactions in the coming quarters.
“The price of rentals continued to increase, rising by 7.6%, and the average rental price is now more than £2,000 a month for the first time. Rental prices have increased by nearly 48% over the last five years, underlining the shortage of properties and strong demand for them, driven by high levels of immigration. The change in the price since 2009 of renting a property is now outstripping that of purchasing a property. The pace of the increases in rent will keep inflation high as it is such a large component of the inflation basket. 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 3.9% 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. It is worth noting, however, that yields have improved over the last year when they were 3.5%, thanks to increasing rent and falling house prices.
“There is good news in that the affordability ratio for house purchases to earnings has fallen to 14.1 times, which is still high but markedly better than the 15.4 recorded last year. This is good news for buyers and illustrates the impact of increasing earnings and falling prices. The discounts that sellers are accepting for their property was lower in the last quarter, indicating they are not having to discount so much if they want to sell their property. Sellers are also prepared to wait longer to sell their property, which suggests they are relaxed and there is no financial distress. Indeed, the average loan to value for the last 12 months is consistent with the prior year at 76% and lower than the exuberant days of 2022 when it reached 80%.
“The data on the supply of new housing neatly illustrates why Guernsey house prices will continue to remain high and strong in the context of full employment, robust earnings, falling interest rates and a growing population driven by positive net migration. Only 61 new housing units have been created over the last 12 months and just 14 in the calendar year to date. Given the States target of 300 new housing units a year to satisfy demand, this imbalance is likely to drive prices higher again in 2025, hold back the economy, keep inflation at elevated levels and make life harder for islanders.”
Stuart Leslie (pictured), head of residential sales at Savills Guernsey, said: “The property market has stabilised over the last three months or so. The start of the year began very much where 2023 left off, with the rise in the cost of living and increasing interest rates slowing activity. But as 2024 has progressed momentum has gathered pace.
“In the Local Market, lower monthly mortgage costs are beginning to feed through into improved confidence, prompting more sales. The more stable market has also given some clarity on values which has facilitated more accurate pricing and is why the gap between asking price and sale price has reduced.
“Proposed changes to the UK tax regime for ‘non doms’ meanwhile have also led to greater activity in the Open Market. Heavily trailed before Labour’s autumn budget, we have seen a marked uplift in enquires from potential buyers in readiness for a possible move as they question whether or not to remain in the UK.
“Looking ahead, the market will likely remain sensitive to short-term fluctuations in the cost of debt, so for those hoping to sell, realistic pricing will continue to be key. However in general we expect the impetus gained towards the end of this year to continue into 2025.”
