‘House demand and prices will stay high despite interest rate’

RISING interest rates may dampen the housing market slightly, but while Guernsey remains a good place to live, demand, and prices, will stay high.

Economics lead at the Institute of Directors Guernsey branch Richard Hemans. (31138777)
Economics lead at the Institute of Directors Guernsey branch Richard Hemans. (31138777)

Richard Hemans, lead on economic matters for the Institute of Directors, pictured, said in response to latest average prices published by the States, that another increase in average prices meant good news for some, but not for others.

‘The increase in interest rates over the next year will likely soften the housing market but the island remains an attractive place to live and demand will continue to be strong’ he said.

‘The main issue remains a shortage of housing, and therefore supply, so until more properties are built, housing will remain a major challenge for the island and the source of many social and economic issues.’

Mr Hemans said that rising housing costs would continue to make it difficult for employers to recruit – workers coming from outside the island would struggle to find suitable or affordable accommodation, and hikes in rent would raise inflation, putting pressure on real earnings and consumer spending.

Local market house prices rose 18.5% over the past 12 months, but properties continue to sell quickly and often close to the asking price.

Rents are also increasing, with a 14% rise seen over the past year.

Looking at matters from the other side of the debate, Mr Hemans said: ‘The strength in the housing market is good news for homeowners who will feel more confident in their ability to spend, and the States who will benefit from document duty receipts. Consumer-facing businesses will feel encouraged that consumer demand is supported by robust house prices.’

Swoffers negotiator Antonia Thomas said that demand for property remained high and far outstripped supply.

‘It’s inevitable that this will push prices up,’ she said.

‘There is a general awareness of inflation, the cost of living, and interest rates going up, but both of Guernsey’s housing markets have shown a lot of resilience to these factors so far.’

She said that there may be more stability in the market soon and a levelling off on prices.

‘Despite the challenges, the banks are lending, and home ownership remains a keen aspiration for many people. Guernsey has an enduring desirability, so people feel confident about buying a home here.’

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