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Housing market "peaks" but demand remains high

Housing market

Tuesday 14 February 2023

Housing market "peaks" but demand remains high

Tuesday 14 February 2023

Guernsey's housing market may still be strong but it is showing signs of peaking, according to industry officials.

Representatives of the Institute of Directors and Collas Crill, a law firm with a property division, have both commented on the recently published figures which proved there was yet another increase in average prices over the past year.

On average, a local market home cost £638,267 in the final three months of 2022 – 15.9% higher than the same time in the previous year, 1.4% higher than the autumn of 2022, and 51.6% higher than five years previous.

In total, all sales combined, 2022 saw the second-highest value of property conveyed in Guernsey since records began, with nearly £900m (£856,297,368) worth of property changing hands. This total is some £100m lower than the highest recorded year (2021), yet still £100m higher than the third-highest year on record (2020).


Pictured: Richard Hemans, Economics Lead for the IoD Guernsey branch.

The IoD Guernsey’s lead on economics said there are a number of indictors that the local market may be peaking. Richard Hemans said that may lead to the number of transactions declining, but he warns that prices won't fall as well.

He said that the level of discount buyers are getting compared to the asking price is now back to pre-pandemic prices. But those buyers are being saddled with more debt to secure their new homes so affordability is still being stretched.

"The bulletin presents a number of indicators that the local housing market may be peaking," he said. "Buyers are taking on more debt with the average loan to value increasing from 76% to 81%. The average length of time taken to sell a property is rising, although it remains at historically low levels. Similarly, the discount buyers secure from asking prices is increasing, but this is only back to pre-pandemic levels. Affordability is becoming more and more stretched, with the price to earnings ratio of local market houses reaching the highest level in 10 years."


Pictured: Paul Nettleship, Partner and Head of Property at Collas Crill.

A total of £586,022,152 was lent against Guernsey property in 2022 - the third-highest value in the 22 years that the figures have been collated, but still some £200m lower than recorded in 2021.

Paul Nettleship, Partner and head of Collas Crill's Guernsey Property team said this hadn't impacted demand but the market was tempered by limited availability and events occurring in Westminster and beyond during 2022.

He said he was expecting things to ease off during 2023 after the price boom of '22.

"After a very busy 2022 I expect a 'back to normal' 2023 – demand for quality housing remains high, and so it is very much hoped that supply will increase to meet that demand."


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