It will perhaps come as little surprise to hear that last year was a difficult one for Guernsey’s property market.

The rise in interest rates and increase in the cost of living lead to varying degrees of turbulence throughout the course of 2023 – with many people deciding to sit tight until the situation improved before committing to a move.

Of course, that wasn’t unique to Guernsey – it was happening elsewhere as well.

Residential sales

The latest States of Guernsey property bulletin for the last quarter of 2023 shows there were 576 Local Market transactions throughout the course of last year – a 32.3% drop on the year before.

Perhaps more encouragingly 150 of these sales were completed in the last three months of 2023 – 12 more than the previous quarter.

The mix adjusted average purchase price for Local Market properties meanwhile sat at £609,362 in the fourth quarter of 2023, 5.9% lower than the previous three months and 4.5% down on the same period in 2022. However it remained 47.5% higher than five years previously.

In the Open Market there were seven transactions in the three months to the end of December 2023 with a raw median price of £1.46m.

Outlook

With inflation now heading back towards the Bank of England target of 2.0% and more stability in the mortgage markets there’s every reason to be optimistic for the spring.

The market is still likely to be price sensitive, but best in class well-maintained homes are attracting plenty of interest. New buyer registrations are also better than expected.

The Local Market has already been busy and we’ve been called to value a number of properties – a sign that confidence is beginning to return and people are readying themselves for a move.

We’re also starting to see more activity in the Open Market. Falling lending and leveraging costs should translate into a wider range of buyers with less pressure on budgets, and we could well see enhanced interest from re-locaters in the coming months with a general election on the horizon in the UK. 

Lettings market

Strong demand and a shortage of stock continued to drive Guernsey’s lettings market for most of 2023 – with monthly rental prices rising by an average of 11.4% according to the end of year property bulletin from the States of Guernsey.

Interestingly, that level of growth began to slow in the last quarter of 2023, with an increase in the average monthly rental price of just 0.7% - a trend that appears to be continuing at the start of 2024.

A rise in the cost of living means tenants are much more mindful of what they’re spending and that’s no doubt been reflected in monthly asking prices. While demand clearly still outweighs supply, relatively speaking, stock levels also appear to be on the rise – particularly smaller properties.

Whereas the fourth quarter of 2023 saw more family homes becoming available, it seems the first quarter of 2024 is seeing more one and two-bedroom apartments, which is positive as this is where significant demand lies and may be conducive to a reduction in the average rental price. This upsurge in stock also gives tenants more choice and could in part account for some of the levelling off.

Whether this trend continues, however, remains to be seen. The cost of labour means many landlords are on the hunt for property which requires very little renovation work. With these properties few and far between and the cost of borrowing still relatively high, the imbalance between supply and demand looks set to keep upward pressure on rental prices in the year ahead.