House sales slump in 2023 but rate cuts spark hope
Guernsey’s housing market had a difficult year in 2023, slumping after its Covid boom to the second-lowest number of sales seen in any year since 2000.
There were just fewer than 1,200 transactions over the 12 months – a third down on 2021, according to the latest figures from ABC Conveyances.
However the market received a potential boost yesterday as some UK lenders dropped interest rates by a full 1%, leading experts to predict a similar rate drop locally could prompt an upturn in the market for 2024.
Property sales for last year totalled just £550m., down by £400m. on 2021, when the market generated almost a billion pounds.
One estate agent described the numbers as ‘miserable’.
‘We have watched transactions from the second quarter and knew they would be low,’ said Stuart Leslie, head of residential sales at Savills estate agents.
‘It is a symptom of the extreme change in interest rates in a short space of time, caused by Liz Truss’s disastrous mini-budget.
‘A quick fall in rates turned out to be inaccurate and they have been higher for a sustained period of time, but I am confident that in 2024 there will be a fall in rates and people will return to the market.’
Oracle Finance director and mortgage expert Conor Burke agreed.
‘The main impact on our market has been the sharp rise in interest rates,’ he said.
‘Consumers haven’t wanted to take on the extra payments and last year was what most people expected.’
The busiest year for house sales over the last 24 years was 2007, when there were 1,849 transactions, which totalled £674m.
At that time the average house price was about £330,000, compared with about £634,000 today.
UK lenders started reducing mortgage rates yesterday with Halifax cutting the interest rate on a two-year fixed deal by up to 0.83%, and HSBC expected to offer a two-year fixed remortgage below 4.5% today.
Mr Burke said that he expected rates locally to drop in the first quarter.
‘All the major lenders rates have actually already been dropping in the last couple of months, but I would expect them to drop further in line with the UK.’
The Bank of England’s interest rate has now been held for three months at 5.25%, and Mr Burke agreed with economists who expect the next move to be a cut.
‘This would be good news for borrowers. The average rate is now between 5.5 to 6% and it’s almost certain to drop. It’s now all about the timing and the amount. The banks tend to be quite competitive in the first quarter as they compete for business.
‘This should stimulate the market and bring confidence back to the consumer.
‘It won’t be a return to the historically low interest rates we had a few years ago, but a ‘new normal’ with no sharp rises on the horizon.’
During 2023 the price of a local market house fell by almost 5% to £634,000 – £30,000 below the peak of 2022. The number of mortgages and bonds were also at a historical low, with just 827 bonds taken out – a third of the number seen in a record year of 2002.
‘The market does appear to more subdued than in the UK,’ said Mr Leslie.
‘We have seen a little softening in house prices that is needed to stimulate the market, but there is always a disparity between the expected sale and eventual purchase price.’
