Whilst the Channel Islands has sweltered in record-breaking temperatures this summer, it’s fair to say that a little heat now appears to be coming out of the housing market in terms of activity.

That’s perhaps not wholly unexpected. A lack of supply and strong buyer demand fuelled by the experience of the pandemic turbocharged people’s desire to move over the last two years – and it would have been unrealistic for that same level to continue.

In many ways we are mirroring the housing market of the UK. Successive interest rate rises and a challenging economic backdrop have led to a slightly more cautious outlook, while the market of the last month or so has been more seasonal than the previous two summers – with people quite understandably deciding to take a well-earned holiday after being unable to travel.

That said, there remains a healthy number of motivated buyers and tenants who are committed to a move and it continues to be busier than it was pre pandemic. We are though, perhaps, beginning to see signs of returning to what could be described as more ‘normal’ market conditions.

Strong Q2 performance

The latest States of Guernsey property bulletin shows just how busy the market has been. Price growth in the Local Market continues to be driven by an imbalance between supply and demand. The mix adjusted average purchase price for properties transacted during the second quarter of 2022 was £598,963 – 4.5% higher than the previous quarter and 18.5% higher than the second quarter of 2021.

Interestingly the three months to June was also one of the busiest in the last five years – with 236 Local Market transactions (37 more than the previous quarter, although 61 fewer than the same quarter of 2021).

This shows properties have been available – sales have just been happening incredibly quickly and buyers have had to act fast. That’s where having a good relationship and registering with an agent can be a huge help because we can alert you to a property that might soon be coming to market.

Properties in the Open Market meanwhile continue to attract significant interest with a good level of viewings – particularly if they are priced sensibly and in line with the market. Q2 witnessed slightly fewer transactions than the same time last year, but prices remained robust – with healthy year on year growth.

Supply demand imbalance fuels rental growth

Much like the residential sales market, rental prices continue to be supported by an imbalance between supply and demand. There are still not enough rental properties available to meet people’s needs – and that’s especially true for larger family homes.

So long as demand continues to outweigh supply there will continue to be growth – most landlords are aware of an increase in market rentals and are keeping a close eye on market trends.

Longer term it will be interesting to see how the cost of living and wider economic factors affect the market.

We may find that landlords keep any potential increases to a minimum because they value having a long term tenant who will look after their property. Many tenants in existing tenancies are also renewing with their current landlords rather than face looking for a new home in an increasing rental market.

What’s in store for the rest of 2022?

Notwithstanding the economic and wider global pressures the market should remain stable as we head into the autumn and beyond.

The supply and demand imbalance looks set to underpin continued activity and – crucially – the lifestyle factors that attract people to Guernsey will not change. Our beautiful coastline, wonderful sense of community, rich heritage and general quality of life remain a significant draw.

A lot of people are returning to the island to raise a family, but there are also several new faces who are moving here for the first time. Competition for ‘best in class’ homes will remain strong – but setting a realistic guide price will be key to maintaining momentum.