Property prices dropping

AVERAGE prices for local market homes have fallen. They reached a record high of £310,650 at the end of 2006, but dropped by 1.7% to £305,425 by the end of March.

Annually, however, the average price increased by 4.9% - above the current inflation rate of 4.8%, according to policy and research unit figures.

Estate agent Keith Enevoldsen said that not too much should be read into the quarterly figure.

'Even with a relatively large number of sales there will be fluctuations from one quarter to another. I think you can safely say looking at these statistics that the December figure was a slight blip,' said the Martel Maides director.

'The annual comparison is a more realistic figure and it shows that local market prices are on average rising in line with local RPI. We'd expect that trend to continue.'

But he and Swoffers director Spencer Noyon had differing views on whether the recent interest rate rises have started to affect the market.

'A 0.25% rise like the one we saw earlier this month won't have much of an impact, but the cumulative effect of this and all the previous rises over the last two years is beginning to bite,' said Mr Enevoldsen.

'Most likely we are starting to see the impact of those rises coming through in the market now, which is reflected in the lower house price inflation.

Not so, said Mr Noyon.

'Although interest rate changes have been felt, they are still generally manageable and we are not seeing signs of resistance from potential buyers because of them.

'Neither are we being told that people are unwilling to move and take on extra borrowing due to mortgage costs

'What is more relevant here is the low number of places available to buy in the middle sector of the market.'

But both men were confident that there was no collapse imminent.

'With full employment and confidence in the local economy remaining high, the market is going to stay relatively strong,' said Mr Enevoldsen.

'To some degree the continuing rise in house prices is a measure of success. If our economy, and particularly the finance sector, was not continuing to thrive, the property sector would be less busy,' said Mr Noyon.

During the first three months, there were 242 local and 29 open market transactions, a record for the first quarter of any year - with 46 over the £450,000 mark and three selling for £1m.-plus.

The number of sales under £150,000 continued to drop - from a peak of 90 in 2000 to just five this year.

* The average Jersey property price was £360,000 and the equivalent UK figure was £201,090.