Today the Q2 property statistics were released by the Government of Jersey. After Q1’s results indicated a change in the market, Q2 confirmed that this trend has indeed continued. In this blog post Harry, our Residential Director, explains what it means for the local property market:
This quarter, a significant number of the transactions were new developments (45%). Again, we knew it was going to happen and Statistics Jersey has been very clear that if you removed them from the picture then turnover was down 62% (not 42% with the new developments included). Now while we know that the transactions were again down, 42% is high enough without the context. 62% is a very high number and is a cause for concern. 28% of purchases in the quarter were investment or second home purchases, which is down from Q1. There is no context given on this point, but we are sure that most of these will be properties that were agreed prior to the new stamp duty on second homes. Finally, there was the first decrease in annual house prices (1%) since 2016.
Overall property prices have remained stable through Q1 and Q2. Statistics Jersey have pointed out in the report that the average sale price for 1 bedroom apartments is now £356,000 though they again, attribute this to the sales of units in the new developments. As was the case in Q1.2 Bedroom apartments average went up by £2000 to £558,000 to a historical high. Again, Statistic Jersey has pointed out that this is due to new developments and that the turnover for both quarters has been driven by new developments. 2 bedroom houses have dropped by £28,000 to an average of £621,000 but 3 and 4 bedroom houses remain largely unchanged. What must be noted is that while houses are unchanged, there is a significantly higher volume of properties for sale in this current market and a significantly lower number of transactions.
Investment purchases are lower than last quarter at 28% while Q1 was made up of 49%. Again we would attribute this to agreed sales at new developments prior to the new stamp duty on second homes. The number has dropped a fair amount and we would expect this trend to continue into Q3.
What is the property market looking like moving forwards?
- Outside of the new developments where people have signed up already as there are still some to be finished and handed over to the purchasers. There will continue to be a drop off of BTL purchases as now with high interest rates there are better options out there than an apartment or house as an investment. The extra stamp duty has had an impact on this. There is hope that the Government of Jersey will revisit the new stamp duty for second homes and at least pause it or perhaps abolish it completely.
- We have seen the number of properties on the market plateau at around 1450-1500 for the entire quarter. There will be more people looking to sell as mortgages become more expensive. However, banks are trying their best to help people in these situations AND there are signs that we are reaching the peak of the base rate rising with perhaps one more predicted to happen. Once this does happen then hopefully we will see an increase in activity.
- Q3 has been particularly slow. We expect the transaction figures to remain very low through Q3 but to hopefully pick up in Q4.
- The Government of Jersey will hopefully move forwards and make some changes. A stamp Duty holiday for first time buyers perhaps? Abolish or pause the additional duty on second homes. Currently in the market there are a lot of people looking to move and in ‘chains’. Investors and stamp duty relief for FTB’s would help unclog this part of the market.
With the glass half full, we feel that we are nearing the bottom of the curve, but Q3 will show that there still has been a decline in transactions. Hopefully that will be the end of the decline but it may continue through to Q4 into 2024. It is very hard to call.