It has been well documented on how prices started high in January and, now in December, though there has been a slight drop in the percentage increase, there is still an increase nonetheless. It has been a talking point in the press, States of Jersey and around many dinner tables. From our point of view it has been constantly surprising. There have been many discussions at Broadlands where the negotiators are stunned when a property achieves a price that we didn’t think was possible. Granted by the end of the year it is more of a shrug. Contrary to popular belief we are not ‘attempting to drive the prices up’, but the sheer number of people looking to buy properties is driving the market to a level that many find hard to comprehend.
The perfect storm
Currently there seems to be a ‘perfect storm’ of many people looking to move, low interest rates, high loan to value rates and generous multiples on lending, leading to extremely affordable mortgages, with a relatively low stock of properties on the market. At the point of writing there seems to be no let up and it will be interesting to see what happens over the next 12 months. There has to be a point where buyers will refuse to pay what is deemed extremely high prices. However, we have yet to see this.
If you drive around Jersey, especially St Helier you would have noticed that there is a high level of building currently going on. But even demand for these properties (mainly apartments) is very high and most have been sold off plan. Yet it seems that developers and the States cannot build fast enough to keep up with the current demand.
How can this be solved? Currently it seems to be anyone’s guess. Repurposing old sites such as St Saviours Hospital, the old Les Quennevais School etc seem to be the best way to go. There is also a solid argument to rezone fields but again does Jersey want to sacrifice green areas to do this? It is a very difficult decision. One thing is for certain, you are not going to please everyone.
The other major talking point has been the regulation of estate agents. To be 100% clear Broadlands are all for this and have been actively speaking to the relevant people about how to enact this. When you consider that we deal with many people’s biggest asset and investment. That anyone can set up in their living room without being subject to checks and accreditation is a little absurd. Regulation needs to be brought in sooner rather than later.
It has been mentioned by some that if estate agents are regulated then this will curtail the increasing prices of property. Unfortunately this is not the case. Whilst regulation will mean that the agents will become more accountable we do not drive the prices up. That is down to market demands and this is out of our control.
What does need to go under review is the entire sales process, start to finish. Currently the process is incredibly unpredictable, stressful and risky. Why do freehold properties only have to complete on a Friday? Why is there no penalty for people pulling out for no reason (this is a very grey area but there has to be a better way)? Why can purchasers only review the legal documentation (contract, boundaries etc) once they have instructed lawyers and incurring fees? Why this information can’t be provided prior to an offer being made so the purchasers can make an informed decision is a little strange. An ‘open book’ approach seems much better than stuck behind a paywall.
The high-end market has also had a strong year
The pandemic has led to a large number of enquiries through Locate Jersey. The minimum purchase price for these individuals has also been raised. There have been record breaking sales and again it is a major talking point. Though how politicians think this part of the market affects the first time buyer market I am yet to figure out…What we do know is that with its links to the UK and Europe, Jersey will always be a popular place for people to want to move to.
Looking to 2022
What will happen? At the moment it is very hard to call. With interest rates still low we expect much the same for the start of the year but there may be an increase by the end of the year. If interest rates rise then it may affect affordability for people who have leveraged highly on their purchase and their mortgage payments increase. This in turn may mean that some cannot afford the monthly payments but it will not mean that there will be a recession. More than likely a small market adjustment. Overall with the level of demand if the base rate does increase it will only to around 1% which is still incredibly low.