After what feels like a long winter, we’re now beginning to see the property market warm up again as we enter the most popular time of year to buy and sell a home.

It will, of course, take time for renewed confidence to translate to completed deals. The most recent States of Guernsey property bulletin shows a definite hangover from 2023 – with the rise in the cost of living and increase in mortgage rates still having an effect in the early part of this year.

Residential sales

There were 93 Local Market transactions during the first three months of 2024 – 57 fewer than the previous quarter and 20 fewer than the same period in 2023. The average Local Market purchase price meanwhile sat at £599,745 for the first quarter of this year – 1.6% lower than the previous quarter, 2.3% lower than the first quarter of 2023 and 45.1% higher than five years previously.

The average price for the 18 Open Market transactions in the first quarter of 2024 was £1,462,500, compared with £1,779,375 in the first quarter of 2023.

The low transaction numbers in the early part of this year relate largely to the properties that went under offer at the end of 2023 as it can take 8-10 weeks for sales to go through. This was a time when there was still some instability in interest rates – so buyers were understandably more cautious. It also has to be seen in the context of the high number of sales in 2020/21. The property market often moves in cycles, so this wasn't necessarily wholly unexpected.

That said, the wheels do seem to be turning again – and more stability in the mortgage markets will provide reassurance. A good number of buyers have realised that we’re not likely to see any substantial interest rate rises in the foreseeable future; it’s more likely that we’ll see some marginal reductions, and that’s provided some comfort.

Greater stability

Just as the weather is starting to heat up for the summer – so it seems is activity in both the Local and Open Markets.

Buyer commitment appears to have improved, budgets are slowly showing signs of picking up and buyer registrations are ahead of where we expected them to be.

Reassuringly, there also seems to be a bit more activity at the top end of the market – driven by greater stability in mortgage costs alongside a slightly improved outlook for economic growth.

The markets are still relatively price sensitive – and finance is still a key consideration – but now that interest rates have settled more people seem minded to move.

The more optimistic outlook has prompted Savills to upgrade its five year forecasts for house prices in the UK, which are now expected to grow by an average of 2.5% in 2024 (revised from a fall of 3.0%) and by 21.6% by the end of 2028 (revised from 17.9%).

Growing buyer confidence

The markets here in Guernsey are obviously very different – but as confidence grows across the English Channel that may well translate to greater activity over here as well.

Best in class well maintained homes continue to generate the most interest, but there are good levels of interest across all property types and price points.

A looming general election in the UK may also encourage some buyers to assess their options and look to relocate.

If the last few years have taught us anything it’s that we can take nothing for granted – but the Guernsey housing market relies heavily on mortgage lending, so the predicted softening of those rates may well lead to some green shoots of growth.

Lettings market

Much like residential sales, the lettings market has shown recent signs of picking up for summer. The year started out strong, with a slight lull in March/April – perhaps triggered by the Easter Bank Holiday and people taking extended breaks.

That being said, demand remains incredibly high – driven by a continued lack of stock, while prices now appear to be relatively stable, and not decreasing to any great extent, especially since the start of the year.

The States of Guernsey property bulletin shows that the average rental price for a local market property was £1,911 per calendar month for the first quarter of 2024 – 0.5% lower than the previous quarter but 7.5% higher than the first quarter of 2023 and 43.9% higher than five years previous.

Of the properties that are available, there is a good mix, ranging from one and two-bedroom apartments to three and four-bedroom family homes. This is always a good sign and hopefully bodes well for the months ahead.

With interest rates coming down slightly, it may also encourage first-time buyers in rented accommodation to take a step onto the property ladder, which could well free up rental properties at the lower end of the market.