First quarter property sales lowest for more than decade
FEWER local market houses were bought in the first three months of 2023 than in any quarter for more than 10 years.
As the market cooled from its post-Covid peak, property prices fell by 3.8% – the first substantial decline for five years.
However, the average cost of local market properties bought between January and March was still £613,942. At the equivalent point in 2018 it was only £407,288.
The figures – published in the States’ latest quarterly residential property bulletin – revealed the pressures of inflation and housing costs on household budgets.
‘Certainly when compared to the heights of the previous two years or so, activity has been subdued. The rise in the cost of living and increased mortgage rates has led to buyers reducing their budgets, while vendors who haven’t needed to sell immediately have decided to sit tight,’ said Nick Paluch, director of residential sales at Savills Guernsey.
‘Prices do still remain higher than a year ago, but we’re now starting to see things settle as the market moves back into what you might describe as a more normal rhythm following a period of unprecedented activity.
‘We do expect things to start picking up. A little bit of sunshine always brings more positivity.’
In another sign of the market slowing, many sellers are having to accept offers further away from their asking price than in recent years.
The difference between maximum advertised prices and final sale prices of local market properties increased in the first quarter of 2023.
The average final sale price was nearly 7% lower than the maximum advertised price, compared with less than 4% a year ago.
The number of open market transactions also fell. Just 14 open market properties changed hands in the first quarter, the lowest since the third quarter of 2017.
But the average sale price of an open market property increased from £1,343,672 to £1,619,391 over a 12-month rolling period.
‘The underlying reasons that make Guernsey such a great place to live and work have not disappeared,’ said Mr Paluch.
‘The lifestyle on offer in the island is a significant draw for those looking on the open market and there continues to be a core number of committed buyers who are willing to make a move regardless of conditions on the local market.
‘Despite any further increases in the interest rate from the Bank of England, the long-term forecasts remain positive.’
Despite local property sale prices cooling, rental costs have continued to rise.
The average monthly rental price for a local market property was £1,778 in the first quarter of 2023. That was 3.1% higher than the previous quarter, 7% higher than the first quarter of 2022, and 36.8% higher than five years ago.
Gill Mooney, head of lettings at Savills Guernsey, said that the rental increases recorded in the first quarter of the year were not necessarily surprising despite sale prices falling.
‘There remains a lot of people coming from overseas to work and we’ve seen consistent demand, particularly for smaller family homes and one- and two-bedroom properties for individuals and couples.
‘It’s the larger homes that are taking a little bit longer to let,’ she said.
