Rise in property sale prices is continuing

But the Covid property boom ended last year, with the number of sales returning to 2019 levels.

The Guernsey quarterly residential property prices bulletin details housing and rental trends.

The latest States report showed how the mix adjusted average house price for properties sold has risen from £493,174 at the end of 2020 up to £638,267 at the end of last year, an increase of about 30% over two years.

But the number of properties sold has stabilised. In 2018 there were 810 sales and in 2019 there were 845.

During the pandemic the number of properties sold increased, with more than 1,900 over the two years.

In 2022 this settled back to 850 properties over the year.

IoD Guernsey’s lead on economics Richard Hemans said the latest bulletin indicated that Guernsey’s housing market remained strong, but was showing signs of peaking.

‘Local market house prices increased by 15.9% year-on-year, which is the strongest annual growth for many years and higher than the significant rises seen during the pandemic,’ he said.

‘However, the number of transactions declined by 14% and is now back to pre-pandemic levels.’

The bulletin indicated what was causing the slowing.

‘Buyers are taking on more debt with the average loan to value increasing from 76% to 81%,’ he said.

‘The average length of time taken to sell a property is rising, although it remains at historically low levels. Similarly, the discount buyers secure from asking prices is increasing, but this is only back to pre-pandemic levels. Affordability is becoming more and more stretched, with the price-to-earnings ratio of local market houses reaching the highest level in 10 years.’

More than half the houses sold in the last quarter of 2022 went for £600,000 or above. This compares with just over a quarter of homes fetching more than £600,000 at the end of 2020.

Stuart Leslie, head of residential sales at Savills Guernsey, was not surprised to see that the market was cooling.

‘The heady heights experienced at the end of the pandemic were always going to be impossible to sustain over the longer term,’ he said.

‘Guernsey has not been completely immune from the tougher lending rates and economic uncertainty facing the UK – and the full picture will not become clear until the quarter one figures are released later this year.’

In the open market it is harder to draw trends, due to market fluctuation, the very wide-ranging types and prices, and the small number of transactions.

There were 28 open market residential property transactions during the fourth quarter of 2022 – seven fewer than in the fourth quarter of 2021.

The median realty purchase price was £1.75m.

‘Open market house prices increased by 6%, which is the lowest growth since the pandemic and the number of transactions fell by 23%,’ Mr Hemans said.