The past year has seen no shortage of media coverage about Guernsey's "runaway" housing market and its "unrelenting" rise in property prices. However, is there more to the statistics than the headlines suggest?
Figures show that the average local market purchase price was £493,174 in the fourth quarter of 2020, a 5.9% rise on the previous quarter and 11.8% higher than the fourth quarter of 2019.
This amounts to the largest annual rise in average property prices since 2008. In addition, unofficial figures for 2021 show that the local market median for the first quarter currently stands at £550,875.
These numbers seemingly put home ownership way beyond the means of most people not already on the "property ladder", particularly impacting younger and first-time buyers. With estate agents speaking publicly about a lack of available housing on the market, it is little wonder that concerns over Guernsey's affordable housing crisis have heightened.
While certain sectors of the local market have seen a boom in prices, there are more factors to consider, as the way that these statistics are reported is often too simplistic.
There is a demand for property in the £400,000-£700,000 bracket, which is increasing the average price. There is also observed movement for high-end property but this may not be as pronounced. However, at the lower end of the market, it is possible to argue that there has not been a great deal of change in the past 13 years.
According to the latest data obtained from the Greffe (the registry for property transactions), the median price of 20 local market flats sold in March 2021 was £277,875, which is less than some months in previous years (when comparing data from 2008 onwards).
There has been less activity at the lower end of the market, which is good news for first-time buyers looking at that price bracket. While the local market boom can seem negative, properties at the more affordable end of the market are still available.
Unofficial figures show a fall in overall sales activity in the first quarter of 2021, with sales at their lowest quarterly level for many years. There are a number of possible reasons for this, including the fact that the courts were closed for all but essential business for a couple of months, as well as estate agents reporting a shortage of properties for sale.
The Development Framework for the Pointues Rocques development suggests that it may be suitable for 75-125 dwellings, and the Development Framework for the Belgrave project could see anything between 100-300 units of accommodation built. New housing inevitably has an effect on the market – if new properties are introduced to the market, buyers have more choice, which means that property prices see an adjustment downwards.
The rise in average house prices comes as no surprise and, in fact, is not even a local phenomenon, with property markets in Jersey and across the United Kingdom having also experienced a surge in activity and similar increases in prices.
In brief, the lockdown put in place as a response to the covid-19 pandemic has resulted in people reassessing their housing needs and wants. However, prices at the lower end of the market (ie, for first-time buyers) have not changed much, or at all, so they remain attainable for those looking to get on the property ladder.
As the lockdown's effect on the economy unfolds and restrictions lift, it is going to be an interesting year for the local market. However, it is always worth reading between the lines before taking the headlines at face value.
For further information on this topic please contact Martyn Baudains at Ogier by telephone (+44 1481 721 672) or email ([email protected]). The Ogier website can be accessed at www.ogier.com.
An earlier version of this article was published in Guernsey Property and Construction Magazine, Summer 2021 edition.