THE credit crunch is having an impact on the local housing market.
But there is no sign of the collapse in prices which has been reported in parts of the UK.
‘I believe that confidence is bruised here because of the credit situation in the UK, but I think the long-term future will be fine,’ said Charman & Co. proprietor Steve Charman
‘A lot of first-time buyers are struggling to get sufficient finance from the banks.
‘I don’t think it’s a property thing, but a series of things that have happened at once, such as zero-10, the credit crunch and a slowdown in the UK property market, which is causing a unique imbalance.
‘It’s possible that we could see a reduction in house prices, but if interest rates continue to come down and borrowing becomes easier it would soon go back to where we were.’
Martel Maides director Keith Enevoldsen believes the Guernsey property market will remain vibrant in 2008.
He said that the market here did not always mirror the UK’s.
‘The key factor affecting property price is confidence in the local economy and while we have full employment and a relatively strong economy, the housing market should remain a sound investment,’ he said.
The average local market price rose by 2.9% last year and Mr Enevoldsen said a similar increase was likely this year.
‘We expect house price inflation to rise roughly in line with local RPI this year, so probably somewhere in the range of 3 to 5%,’ he said.
The Bank of England’s Monetary Policy Committee is widely expected to cut interest rates by 0.25% to 5% today, which would be the third reduction this year.
Mr Enevoldsen said that would be welcome news for homeowners, many of whom have faced rising mortgage costs over the past two years.
‘Factors such as interest rates are not something that we have any control over locally, but clearly they do have an impact,’ he said.
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One Article Comment
Steve Charman I think that you are burying your head in the sand here. The Banks in Guernsey borrow money at the same rates as the UK and mortgages are related directly to the bank Rate. When as in Guernsey confidence is so high that loans of up to 8 times salary are given, when the crunch comes as it definitely has, the affect is going to be relative. Developers you will find will have property that they cannot sell and first time buyers will need deposits similar to the uk. And 10% of stratesphoric prices means that a house is out of reach of anybody save the extremely well off.