THE average local house price in Guernsey has risen to more than £400,000 for the first time.
ABConveyancing figures, which are put together by Unusualities of Guernsey, found the mean for local house prices has risen by £24,000 in the past year to £418,710.
Treasury and Resources minister Charles Parkinson has attributed the rise to the sale of more houses at the top of the market.
‘Vendors are still holding out for high prices and are after properties at the top end of the market,’ he said.
‘However, there has been a drop in the number of sales at both ends of the market.’
The number of local homes sold last year has dropped to 576 from 842 in 2007.
Open market sales have also dropped, with no houses sold in August or December and no flats sold in July, August and October.
‘The credit crunch has affected us,’ said Deputy Parkinson. ‘People are finding it hard to arrange a mortgage and are concerned about the future.’
Despite the drop in the number of sales, which has led to a reduction in the amount of stamp duty collected, Treasury and Resources is still expecting to hit targets set in the Budget.
Deputy Parkinson estimates that the housing market could remain subdued for two years.
The news has not come as a surprise to estate agents.
‘People haven’t been buying local market houses like they have in previous years,’ said Martel Maides director Keith Enevoldsen.
‘In the first half of the year it was due to affordability and in the second half of the year it was due to a lack of mortgages.’
He does not think the housing market will be perking up in the near future.
‘I suspect it will not change. The Bank of England has dropped the base rate by half a percent, but that won’t help the mortgage market, because the two have become disconnected.’
He attributes the rise in prices to the quality of houses being sold.
‘I think many of the properties sold in 2008 have been of a generally high standard from the middle and top end of the market, whereas in 2007 they were more from the middle and lower end.’
The open market has also suffered badly, according to Martel Maides open market director Richard Fox.
‘In the memory of practising agents, there’s no recollection of a year when so few homes have changed hands in this particular sector of the market,’ he said.
Lovells are unsure how the future of the market will play out, but agreed that this year’s figures have been distorted by the selling of high-end properties.
‘More houses from the top end of the market have sold, making the average house price appear high,’ said managing director Chris Lovell. ‘There are fewer low end properties selling because there is less supply.
‘The future is very complex. The market is always changing and moving. However, the abrupt slowdown in the UK is affecting Guernsey.’
Article posted on 13th January, 2009 - 2.30pm
31 Article Comments
Strange as they’re falling all the time in England and Wales!
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Yet they are rising in Kuala Lumpur, funny that
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guernsey still way behind england i see.
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Guernsey is simply a passenger on Global Economic Airways….almost nothing you can do about it……how many people are homeless in Guernsey now? when I was young it was about 40….how many now? Its only going to increase….that is until they can hash enough money together for a Condor ticket…….like we did.
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Ridiculous! I left the rock years ago and could not afford to return now, property prices are simply unrealistic.
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I cant see how the States ever expect young people in the island to be able to afford these ridiculous prices!
The States really have to do something about this and fast otherwise there wont be any first time buyers left in the island! Then we will have the problem of not enough people to cover the lower level job roles etc etc
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Looks like my hopes of being able to get my first house due to the recession are shot down in flames.
And Bob, just because people are first time buyers does not mean they have lower level jobs thank you! I still live with my parents and have had to train 2 new people ,who own houses, to do my job as i have progressed. Just because we cannot afford a house yet doesnt mean we have c**p jobs.
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Shared equity schemes are the answer – ideal for Guernsey’s economy. People could buy anything from say 40% upwards of a house, pay “rent” on the other 60%, and exercise their annual right to buy further tranches of 10% at a time as their financial circumstances allow it. Its the closest we are going to get to solving the problem even if its not perfect. The key is not to limit the properties available for shared equity to specific new-builds. There is no reason why it cannot apply to every local market property on the island if there is a pool of public or private funding to facilitate it. Let’s face it – for those putting up the funding, Guernsey local market property has been rather a good investment for the past 20 years.
Only a small deposit would be required as the funding vehicle would be buying the first tranche of equity. Take a £300k property where somebody has enough income to service a mortgage or pay rent, but has no deposit and cannot get onto the property ladder. If he/she can service a £120k mortgage then they could acquire 40% of the equity. They would pay rent on the other 60%. They would be on the property ladder with a home of the type that they want/need, and without having to find up to 30% for a deposit in the current market.
Yes, their rent on the other 60% is dead money, but so is paying 100% rent on a flat at the moment with no light at the end of the ownership tunnel. But the system actively encourages owners to quickly take up their option to buy further tranches as soon as they can afford it, which reduces the rent element.
I think there are far more pros than cons to this system for Guernsey’s unique housing market.
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house prices has risen by £24,000 in the past year to £418,710 – ok, right
but what about this:
1British Pound = 131 Japanese Yen Jan 14,2008
1British Pound = 249 Japanese Yen Jul 20,2007
looks like different trend
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I recommend all graduates to emmigrate to Australia or Canada. Quality of life is good and they may even be able to buy a house and have a family before they turn 50. My husband works in the consulting construcion engineering industry in the UK and loads of consulting firms are laying people off over here. At least Guernsey should be glad they’re not having to lay hundreds of staff off – yet.
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These house price averages are a waste of time and the GP should know better than to publish surveys which are based on small sample sizes and bad maths without applying plenty of expert opinion and a healthy pinch of salt.
Think about it….Only 576 homes were sold in the full year (out of a stock of 22000?)and if all of these 576 homes were worth £1million each then guess what, the average house price in Guernsey would suddenly become £1 million!
With house sales down around 40% year on year you didn’t really think that prices would be going up, did you?
The reality is that this average house price only applies to those houses that have actually been sold during 2008….this cannot be the average house price for the island unless all the properties currently on the market are also included.
It would be more accurate to call it the “average price of houses sold” rather than the “average house price”…not totally inaccurate at the GP but certainly a little bit lazy and possibly playing for the juicy headline.
The real story behind this headline is probably more interesting as it could mean that the only people buying at the moment are those poor unfortunate immigrants here on short term restricted licences that need somewhere to live and can only buy at £400k or above due to the TRP set by the States.
True locals have a lot more choice in the lower TRP levels with prices starting from only £147k but they also have time on their side to wait it out for a bargain.
Maybe the GP should be looking at the property divide caused by TRP and how it can effect the value of your property by excluding certain types of buyers or how the treasury is going to cope with a 40% decline in local market sales and several months without any open market sales at all….how will they make up for this lost cash from the conge (or whatever it’s called now) etc as house sales stall?
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Carts has summarised very well what I wanted to say. Recently we had Keith Enevoldsen of Martel Maides saying that sellers were being too greedy and that buyers were waiting for a bargain. Printing a headline like this one only makes current sellers continue to expect too high a price for their property in the current market, and will only worsen the current standoff situation between buyers and sellers slowing things in the Guernsey market even more.
Guernsey cannot be immune to the fall in house prices, as basic economics means that lack of demand, as we have in the island at present, results in lower prices. If vendors really want to sell, they have to accept this and be realistic.
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That’s Guernsey for ya…
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Carts and Frank have summarised this very well.
The whole housing “thing” is a bit of a merry-go-round. It only takes one or two to jump off and the whole thing slows down.
It is really nice, however, to see estate agents squirming!
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I wonder if by “house” price they mean “property” price. This is relevant because when comparisons are made with other countries they usually use “property” price because basic units, flats etc are taken into account. Guernsey has very little of these lower end of the market type of property which decrease the average price.
I do feel for young people trying to get onto the property ladder, especially those without parents who can assist them. Young working families should at least be given assistance in the form of a childcare subsidy to enable extra income to be produced.
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With the Pound sterling loss against the Euro, houses,by European standards,are not that expensive.The Pound was once worth 1.70Euros,its now just worth 1Euro!But nevertheless houses are far too expensive,especially for young people.
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The conveyancing industry in Guernsey is grinding to a halt. Fact. Conveyancing bonuses are disappearing, lots of retraining and many jittery people around at the moment.
This would be the perfect time to reform the system. Deregulate the conveyancing process, taking it away from the gift that it is the to the law firms, and getting rid of doc duty avoidance; the preferred method being sale by share transfer.
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So if a deposit is say 10% of house prices, im going to have to save my entire wage, for about 3 years to be able to afford my 40,000 deposit! well thats me never goin to be able to buy a house! England here I come! Iv seen 4 bedroom country homes, with stables, land and swimming pool for about 600,000 in England. Whereas that would get you, maybe a 3 bed bungalow…? if your lucky. No wonder the children arent stayin round, they cant afford it! states, you have to do something to help first time buyers! or do you not realise we arent all on your high wages.
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Bethany. You give bad advice when you say Guernsey grads should emigrate to Australia or Canada. First, both countries have been hit and continue to be hit hard from the effects of the gobal financial meltdown. many hundreds of thousands from both countries have lost their jobs and homes with many more job losses to come because many company’s, large and small are closing down and/or going into bankruptcy.
In addition, Australia is running out of fresh water supplies. The land is turning into a dust bowl. We’ll be hearing a lot more of that.
Canada is greatly affected by U.S. whose economy is in a a shocking state. Multi thousands have already lost their homes to bankruptcy. Many thousands of jobs have already been lost in Canada and there’s more coming down the piplne. In addition, most of the country has been buried in a deep freeze for the past few months with tempreatures as low as 43 degrees BELOW zero which means your skin freezes within in a few short minutes of being outside. There’s lots more, you can easily find proof of it on the internet, but my point is, you’d be well advised to stop looking for greener grass on the other side of the fence. It isn’t there.
Take it from one who knows. Guernsey is a lovely island. It is a beautiful place to live. Look again at it with fresh eyes and thank your lucky stars for what you already have.
Good luck.
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it’s true these prices are madness.. I have a 39 yr old bro whos living at home as both rental and mortgage prices sky high he’s gona leave island as has nearly everyone i went to school with…………..several thousand pounds debt (ie mortgage) isnt good when uk cheaper but wrong as we grew up here and now cant afford to live here.
If couples struggle think what single people do???
It’s even harder!!!!!
guernsey chasing off the population and locals and losing skills.
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Expat – In some cases I think the grass really is greener. For those studying for a vocational qualification, moving abroad should be a serious consideration. In these instances, places like Australia, NZ and Canada are actively recruiting UK graduates. The work is there!
New grads simply cannot afford to return to Guernsey. The starting wage for a health care professional, dentists, physios etc. is, optimistically, between £16-20k. School leavers walk into finance and earn as much at 18. Grads are simply priced out of the island despite having a qualification that you would expect to offer them a reasonable quality of life. Can you blame them for moving to a country that offers them a lifestyle commensurate with their education?
Me? I’m moving to New Zealand when I graduate. Kia ora bro!!
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David’s Shared equity schemes idea (14 January) seems a good idea.
Odd that no one has made any comment.
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Stephen
Shared equity schemes are ok up to a point, but they were delivered as a panacea in the UK when Thatcher decided that important UK assets should be sold to the highest bidder for a quick buck to make it look like her now obviusly failed economic policy would bear fruit for the masses.
Instead of forcing people to own houses we should be building new States housing to accommodate those who cannot afford the falsely inflated market. Deputy Jones is slavishly following a model that has capitulated. More intelligence and less pandering to landlords is needed to ensure that the next generations are not left living with their over burdened parents, or indeed leaving the island altogether to try and get a life.
Buying up shares in your home seems sensible but it won’t stop the market overheating, and instead of own your own house you’ll end up with a fraction of one, that will have to be sold to buy a fraction of another one. What will be the difference?
Drastic action to curb speculators’ purchasing power, a tax on the increase of property prices and more social housing is what is needed.
The worry of where one is to live should not be part and parcel of life in a developed society.
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Fast Robert
You are quite right that speculative developers can and have given shared equity schemes a dubious image on several occasions, but there are ways and means of controlling and regulating it so that the developer is not the only winner.
The reality is that land costs on an island of 21 square miles are not something that anybody can control. Private landowners are not going to sell land at a big discount, and the States doesn’t appear to have a suitable land bank, so I’m afraid that controlling land availability is a non-starter.
I don’t see a huge amount of difference between owning 100% of a £400k house with a £350k mortgage owed to the bank, and owning 60% of the same house but with a significantly smaller mortgage and with no need to find that now-elusive 30% equity deposit gap, a gap which is virtually impossible to fill through conventional means.
The biggest negative about shared equity schemes to date is that they focus on specific developments, which can easily create ghettos. That can be avoided altogether by creating a shared equity scheme which can be used for any property up to say £600k in value, which as a result addresses the needs of both first-time buyers and second-time buyers. It is no good focusing only on first-time buyers because they are still totally trapped when they wish to start a family. Families could them move to owning maybe 80% of a flat to 60% of a family house without any extra debt and then stay in that family house, purchasing the remaining 40% equity over the next 10 years or so in tranches as and when their circumstances permit.
Sorry, but I won’t believe that the above is a worse solution than being stuck in no-mans land unable to afford to buy and with no hope of saving enough for a deposit for a mortgage.
It is realistically achievable with some flexibility and open-mindedness to create a suitable scheme tailor-made for Guernsey’s unique housing market.
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Fast Robert
The Dwellings Profits Tax takes care of one of your points.I think it starts at 100% tax on the profit if a buyer lives in it but sells within twelve months, or if a buy-for-rent property is not kept for five years.
The States do make an effort from time to time such as the Pecqueries Estate at La Passee.Sold new at about £75,000 in the mid nineties, they are now selling at over £300,000.
The price of builder free plots is a clue to the problem. You’d be lucky to find one at under £300,000 which makes the average house price of £400,000 seem justified.
I think the States should compulsorily purchase derelict vinery sites at say a 50% premium over their horticultural value and build more shared equity housing.
Or is it time to start building high-rise flats on the limited building space available ?
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I disagree with the compulsory purchaase order on derelict vinery sites. Zoning issues regarding development should be no different weather property is publicly owned or privately owned.
Why not erect shared equity housing in the middle of Lancresse common instead ? …. It would be cheaper for the states as it is already publicly owned.
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Jamie
Even better – build a new airport out to sea on reclaimed land, sell off the existing airport land for housing and include a significant element of shared equity housing there.
Another option is to look at buying and utilising the site at La Ramee -with the best will in the world its never going to be another golf course and its a massive land mass that hardly anyone ever even sees or knows exists. It therefore wouldn’t be missed if not preserved totally as green farmland. It could even include a new public park and a sizeable hotel – something the island badly needs if we are to even attempt to diversify the economy as our current hotels cannot cope with large conferences. It would be absolutely ideal for a Center Parcs-type parkland resort with recreational amenities open to the public as well as for guests, and with sensitive housing built around it.
No doubt some would attack the loss of public green farmland but land is the one factor which completely restricts our ability to sort out the housing problem in terms of affordable housing for locals and the capacity to bring in licence-holders for the public and private sector if our economy is to diversify and grow. A price worth paying in my view.
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The other option is to move to the Isle of Man – no property owning restrictions, plenty of space, lower personal income tax and far cheaper property – all in all a superb quality of life.
It may be a tad colder, although not recently, but the rest makes up for it.
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It seems that the redundant laws preventing structures from having a particular permissible height should be overturned – Guernsey is in the same situation as many of the other small principalities of the world which have limited land space, most of which have decided to build up. I think that the only solution that will drastically reduce the house price level is to build skyscrapers of “lower” end accomodation suited to first time buyers. Guernsey has already run out of available land space, but people are insistent on redeveloping brownfield sites so that they are conforming to the heritage of Guernsey. I am under the impression that having isolated zones of skyscrapers and maintaing heritage is mutually exclusive?
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I am a first time buyer, i bought my house, and i state HOUSE last year, when no-one was lending!!! all because my partner and i (who arent on fantastic jobs) saved for 5 years and got our 10% deposit down which was 40K and then what little we had left, had to cover our legal fee’s which to point out are highly expensive. And our parents certianly did not help us, i refuse to take from my parents. it makes me sick all these Rich Uni Kids that come back from 4/5 years of boozing it up in the mainland while people like me are working hard to buy my first house! The states wont help people like me, a real first time buyer! They said if my property was under £120K they would have helped me, oh yes id love to live in a shed as that’s all i would have got for that price! The states would rather help mothers with 3/4 children in tow, dont work, cant be bothered to work! I’m proud to say i’m 24 years old and i own my house! id rather be working for peanuts like i do and own my own house, then live off the states!
Young people like me, shouldnt move, they should just save like we did! i mean what’s a night out in town, roughly £50 maybe £60 quid a night well dont go out that weekend, save it!
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Deputy Parkinson wants to ’suspend’ Dwellings Profits Tax.
That seems to be a bit of a wishy washy way to put forward a proposal.It’s almost an admission that he doesn’t really know what will happen if the proposal is passed.
No doubt the intention is honourable.He has to find a way to stimulate the market after being hit by a massive drop in the number of property sales during 2008 which has cost several million in lost Document Duty. For every 400K average price local house not sold he has forfeited 12K in Document Duty.( For a very good read on Document Duty go to Swoffers.co.uk site )
Here’s a thought on what might happen ….
Individuals with spare cash pulling in a few measly pounds in interest a month will seize on the opportunity to buy up local flats and houses,splash a bit of paint about and sell them on at 10% ? more after a couple of months just like they were doing when Dwelling Profits Tax had to be brought in ( except in those days the concept of selling flats had not yet been introduced)
That’s ideal for the Treasury, two sales of the same property in a couple of months bringing in 24K duty on a 400K house.
The downside is of course that the average price has now shot up to 440K
What’s good for the Treasury will not be at all good for the young people of Guernsey
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