If a week is a long time in politics then the three months since our last property update might just feel like a lifetime. A lot has happened since the end of the summer – with two new prime ministers taking office in the UK, continued economic uncertainty and rising costs of living  having a significant effect on housing markets across the English Channel.

Fortunately, Guernsey has been somewhat insulated from wider pressures. There’s little doubt that activity has started to slow when compared to the frenzied heights of the last two years or so. But historically the island has always been well placed to weather any wider market storms.

Robust performance in Local and Open Markets

According to the latest Sates of Guernsey Property Bulletin the average price of Local Market properties transacted during the third quarter of this year was £629,297 – 5.1% higher than the previous quarter and an increase of 13.5% in the last year.

This growth has largely been underpinned by a lack of properties for sale. The figures for Q3 would seem to bear this out.  There were 234 Local Market transactions during the third quarter of 2022, two fewer than the previous quarter and 51 fewer than the same quarter of 2021. However, transactions remain 16% higher than the pre-pandemic Q3 average between 2015 and 2019. 

A lack of supply has also led to fewer property sales across the Open Market –  with only 23 during Q3 2022. This made up just 1.6% of all property transactions on the island and compares to 36 in the same period last year, although the pre-pandemic Q2 average between 2015 and 2019 was 15.

Meanwhile the median Open Market price was £1,576,345 in the third quarter of 2022. The four quarter average, which reduces the effect of seasonal fluctuations, increased by 18.8% between the third quarter of 2021 and the third quarter of 2022. 

Whether Local or Open Market – demand for well-presented and appropriately-priced homes remains robust. Properties are still selling within a good time frame and we have also been pleasantly surprised by the number of buyers who remain committed to a move.

However, it’s worth remembering that the majority of transactions which this latest update covers would have taken place over the summer when the base rate was lower. It’s not necessarily reflective of what we are currently experiencing.

Looking ahead, it’s perhaps inevitable that levels of activity will calm. Rising interest rates and the higher cost of living are putting pressure on buyers’ budgets. However the supply/demand imbalance may well continue to support activity to some extent. Setting a realistic asking price will be fundamental for anyone looking to sell.

Slow down in rental market

Much like residential sales, rental prices for most of this year have been supported by an imbalance between supply and demand.

The Q3 States of Guernsey property update shows a 5% drop in average rental prices for the three months to the end of September. However at £1,726 per calendar month the figure is still 7.9% higher than this time last year.

The quarterly figure is reflective of what we’re seeing on the ground. Professionals, corporate relocators and families are still driving demand – and good quality, sensibly priced properties remain popular.

But we’re certainly seeing less people looking when compared to earlier in the year. This can often be seasonal – and it’s no surprise to see a slight slowdown over the summer – however the increase in the cost of living appears to be making people think twice.

We’ve had a couple of properties recently for example where landlords have decided to reduce the price to reflect people’s budgets and secure a rental so that the property doesn’t stay empty.

Longer term it will be interesting to see how wider economic factors affect the market. You may find that more tenants decide to renew their tenancies with current landlords rather than face paying the costs associated with a new move, while some landlords may also decide to keep rents relatively stable because they value having a long term tenant who will look after their property.