THE number of homes sold in Jersey has dropped to its lowest level in six years.
In the Jersey House Price Index there was an average of 26 homes sold per court sitting between July and September this year — the lowest number since the last global recession in 2002. That number was also a third lower than the long-term average of homes being sold: 39 per court sitting.
The fall was mainly due to fewer two- and three-bedroom homes being sold in the third quarter this year compared with previous quarters. Yesterday’s release of the latest House Price Index also showed a 21 per cent increase in house prices compared to the same time last year.
This is remarkably better than the UK market, which announced a three per cent drop for the same period.
The average (mix-adjusted) price of homes sold in Jersey has been steadily rising ever since 2004, and this quarter broke the half-million barrier at £508,000. Today’s figures show the following average prices for July to September compared to the 2007 averages:
• One-bedroom flats: £229,000 (up from £182,000).
• Two-bedroom flats: £322,000 (rising from £259,000).
• Two-bedroom houses: £447,000 (up from £366,000).
• Three-bedroom houses: £541,000 (increasing from £449,000).
• Four-bedroom houses: £706,000 (up from £596,000).
Article posted on 12th November, 2008 - 2.58pm
37 Article Comments
Chickens coming home to roost for the estate agents?
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According to the raw data, one bedroom flats rose from a £182,000 to a high of £255,000 in January – March before falling to £229,000 in the last quarter.
Over the same period two bedroom flats rose from £262,000 to £327,000 before falling back to £322,000.
Houses rose in price over this period.
It is very hard to say what is going on in the market now as Jersey Home Loans was trading during much of this period.
The fact that they are no longer operating may well have a big effect on the October – December figures.
Certainly I would expect numbers of properties sold to decline.
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What do you expect when an average 3 bed house is over £1/2 million!!
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Easing of demand will lead to price reduction. House prices will fall.
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Well that a BIG suprise because earlier this week we had avoided the recession according to the man that “manages” our money.
Sometimes I think that our politicians believe that they are in charge of a large mushroom farm in the middle of the English Channel. All they have to do is keep the residents in the dark and feed us with whatever you feed mushrooms on
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Well said Phil! Apparently we are not in a recession and yet this article states:
“the lowest number since the last global recession in 2002″
Interesting…. but we arent in a recession are we Mr Le Sueur ?!! Stop assuming the residents of this island are stupid.
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Just becuase the number of sales are down doesn’t mean we are in recession. The difference here compared to most other places is that we normally don’t have to sell, so why would you sell your house for a loss? House prices have never dropped in the past 30 years so why do we think they will now, 5 pages of jobs tell you we are not in recession. hard times yes, lower sales in all retail outlets (including houses) yes but recession, not yet!
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30 years maybe John… But the world economy has never been hit this hard!
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The Jersey property market has been rising so strongly for a number of years that a lot of people can take a price cut and not sell at a loss, in fact thay can bank a big fat profit and clear off elsewhere.
Maybe not as big and fat as they would like but still more cash than most people will ever see in their lifetimes.
Jersey’s population has changed over the last 30 years; people used to come here to settle and make a home, raise their children etc. Now more see it as just another stop on the global banking career go round.
Jersey looking a bit tired; off we go to Dubai, Hong Kong or elsewhere!
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Sean, How do expect people to come here and settle and make a home with quallies system in place…. It’s made quite clear by the Island’s laws that you can’t but yet we need outsiders to help with the economy, so we cannot criticize those that make it just another stop on their global banking career!
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Sean’s point about population is absolutely critical to understanding Jersey’s future. Young people leave the Island to got to Uni and never come back. Other young people come here to work for a few years and then go somewhere more interesting. Can you see where this ends up? Our complete reliance on the finance industry to sustain our economy into the future is disastrously misguided. House prices as they are guarantee that no-one can come here to settle and raise a family. Once we have built all over Jersey’s countryside and turned the place into Surbiton-by-the Sea, no-one in their right mind will want to come and live here for more than three or four years. So; transient workforce with no local links plus ageing local population entirely dependent on tax revenue from transient industry with no local links which is soon to face an enforced major global review of its core operating methods and its legislative framework. Anyone that says our current crop of politicians has done a good job has their head in the sand.
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Bruce Labey has hit the nail on the head. I am Jersey born and know I am leaving because I have had enough of it all. You are all welcome to join me if we get enough we could charter a boat to take us to New Zealand where they have got a clue about running things.
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What a lot of short sighted views on here.
The problem with tunnel vision is that it only sees one way which is straight ahead.
Those looking for cheap houses and give away prices are in for a shock.
If the persons here present could see further than the short term they would instinctivly know this is a mere blip on the house measuring monitor.We have had recessions since time began, things do naturally go up and down.
The over zealous attitude to put a damper on things is an artificially created over hype.
Things will resume as normal shortly.
Rest assured.
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Yes the normal annual price rise for property comes out at 2.9%. As prices have gone up 50% or so in the last 2/3 then a nice large adjustment is due to return to the historical norm and back in to some form of relationship with wages. In fact prices normally overshoot on the way up and on the way down ….
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futurist:
I will meet you in the unemployment queue.
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futurist – you are the voice of reason amongst all the bandwagon jumping pessimists. People are still buying property it’s just levelling out a bit. The prices have increased dramatically over the last few years and people have still been able to buy… and people can still buy now, the forthcoming cuts in interest rates will make it easier so the prices may go up even further!
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Actually Surbiton is rather pleasant, less grubby than Jersey and not the polarised community we have over here now.
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Property values.
The last property surge was caused buy the allowance of reckless lending by one lender in particular.
The reason an average 3 bed semi rose in value so quickly was because that one lender would lend up to 5 times salary in addition 14 times the annual rental value of up to two bedrooms, which would have the potential to be let to lodgers.
On an average case of £75 per room per week = annual rental of £7800.00 x 14 would produce £109,200 extra lending.
In addition they would allow a privately borrowed deposit of up to 5 percent of the value of the property. so in essence a 95% gearing.
This is a worry for some purchasers who are locked into this lender, as when favourable fixed rates mature there could be very little on offer, in addition with those salary multiples an room allowances, they will be unable to move lenders in the near future.
Without these facilities we are already seeing a downturn in property sales in jersey as banks are returning to sensible lending with proper deposits and loan to values.
It is now becoming apparent, contrary to what is portrayed by all those get rich quick property experts, property prices do vary and property is a long term bet.
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On your figures a couple with a joint income of £80,000 who bought in the last few years could be carrying £500,000 worth of debt.
Allow for car loans, loans on the new kitchen, bathroom etc and a bit of credit card borrowing as well and it could be £550,000, which gives a gearing of 6.9 on income.
Allow for retail prices rising by 6% this year and things must be getting a bit tight.
If they have a baby or one of the rooms is without a lodger for a few months debt would start to pile up at a terrifying rate.
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Mark G rest assured you wont be meeting me in the employment queue as i am self sufficient.
Never needed employment,and never will.
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Property in Jersey has always been, expensive and probably always will be, I‘ve just read that in the 80’s you had to apply in writing to view a three bedroom house before it was even considered. The prices have always been way above that of the mainland and this was in an era when banks were very sensible with their lending and had much higher interest rates than they do now.
The UK had a massive housing crash in the early 90’s in their last major recession but yet Jersey prices haven’t fallen in 30 years. The Island has a finite amount of land for building so prices will always be at a premium, remember all Jersey has to do to prop up its housing market in times of crisis is to lower the quals level so more potential buyers will enter the market!
Those of you hoping for a ‘readjustment’ in prices may be waiting a long time……………
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It’s a credit crunch that is driving prices down with a recession about to crash hard in to Jersey and no doubt lay offs to follow. Lowering qualies will not make financing for new mortgages more affordable / available or make re-financing of existing arrangements cheaper. The price of anything is only what a willing buyer and seller agree and if buyers cannot borrow anything like what they could in the last 5 years then QED prices fall.
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Bruce Labey
Show me the figures that state more young graduate immigrants are coming to Jersey than local young leaving or more local young are leaving than staying. Anyway the fact is we are free to travel and every strong economy will have a population turnover so don’t try and spin population turnover as a vehicle for your anti finance views.
Whilst we’re at it what industry would you suggest as an alternative? Tourism… dead! Not just because of finance but because global travel is a lot more cheaper to the average person than it was 20 years ago meaning competition has increased – not just because Jsy is now more expensive.
Agriculture? Already heavily funded by the tax payer and will never ever contribute to GDP as much as finance.
Finance might be transient. But while we have it we must make the most of it – all alternatives would lead to a much poorer Island even at maximum capacity.
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Al, you’re missing the point, lowering qualies lets more people buy, some of these will be able to afford the mortgages, leading to an increase in demand!
Jersey is possibly one of the best places in the world to be in this recession… While the rest of the world suffers Jersey House prices have risen and deposits into the Island have increased, the papers are full of jobs, interest rates on mortgages are about to come down to record lows. There may not be the ’silly’ lending policies of late but they were not around 10 years ago and yet property prices were still going up then!
History will prove my point.
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I must admit that I am keeping an open mind on this.
A few years ago Jersey estate agents were trotting out exactly the same arguments about shops in Jersey.
Limited area in St Helier, economy always booming sir, rents will never come down and you will be very lucky to get away with only a hefty premium to move in.
Now rents are way down off their peak, up to 40% in some parts of St Helier and instead of paying a premium some landlords will give you a few months rent ‘holiday’ to get you in!
Some of the States members seem to be thinking that we may be heading for a recession. Sarah Ferguson, who is one of the smarter cookies in the tin, is pressing for
tax cuts to pump money into the pockets of middle Jersey.
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Heh Bergerac I think you may be a bit of a Pollyanna (but their are certainly worse things to be : ).
The average house is now more than twelve times the average wage in Jersey. Surely it must be clear that is completely unsustainable and that so even if qualies were entirely done away with which would not change salaries. Reducing qualies would have a minimal effect on demand particularly as it would likely be incremental a year or two less per year. If you can only borrow 4 times salary then you already need to be earning almost double the average to look at modest two bed properties. That’s before you factor in the 5 or 10% deposit that all lenders require and other associated costs – I suspect there are very few people without qualies sitting on £20,000 or so. The cheap credit and ridiculous multiples have meant that hundreds if not thousands of Islanders and people with qualies have mortgages they would never have been approved for in normal times and which they will find difficult if not impossible to re-mortgage. So we have people who borrowed well beyond what was really affordable shortly going to be stuck on for example JHLs standard variable rate and only able to downsize if they sell and move out. They are also being hit by GST, significant cost of living increases and 20 means 20 on their mortgage interest. The impending recession is the final straw as it seems almost inevitable it will lead to substantial lay offs.
Al (the Bear)
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I bought two houses during the 1980s in Jersey and sold one and I never had to apply in writing to view any properties.
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Joker – believe it or not I’m not anti-finance. I am convinced that some form of finance industry will be a part of Jersey’s economy for a while yet. My real concern is the Island’s complete and absolute reliance on finance. This is a huge strategic mistake that leaves us enormously vulnerable and, with the demise of agriculture and tourism, this junkie-like dependence seems to be getting worse. Plan B? ain’t no Plan B that I’ve seen, which is my real point. True, I don’t like the dodgy grey money element of finance over here, partly because it just sticks in my craw but mostly because it gives a nasty impression of my home to the rest of the world and creates enemies for us in a time when we need all the friends we can get.
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Al (the pessimist), we’ll see………
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I am not anti-finance either.
I want a rational discussion on the future of Jersey’s economy and the possible effect on house prices.
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Back in the early 80s when finance really began to kick off, if you were faced a risk/benefit analysis of the following 2 options which would you choose?
a) Stick with a diverse economy which will guarantee small income with no risk;
b) Put all resources into finance at the sake of other economies to generate 9 times more wealth per head of (finance) working population for the Island for the next 40+ years with the risk there will be transition costs if it leaves.
B carries more risk but the rewards have been far greater hopefully mitigating any transition issues when – sorry IF – they come. Besides, finance isn’t going to be here on a Tuesday and gone on the Wednesday – the Island will have some time to adapt and prices etc will eventually fall making our traditional export and tourism industries more attractive again. This Island has been changing economies for hundreds of years – it adapted then and if need be it will again.
From another angle – If there was real economic sense in agriculture and tourism why are most developed and emerging economies heavily focused on finance? Not just because of globalisation but because it generates far more income and benefits for those economies.
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I think all those people who borrowed as much as possible will be pleased they had the ability to do so (especially since its not going happen again soon). They will make dam sure that they remain in that position by whatever means possible.
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LITRW.
I take your point! but remember it is not the ability to borrow! that has been proven to be the easy bit.The sensible ones will trim lifestyles the capital now!
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Al is the only person who really understands what’s going on in credit crisis. Of course it’s all about what can be borrowed that drives the housing market. People are no longer able to borrow such huge amounts, meaning demand will go down, meaning house prices will fall. It’s not exactly hard to work out guys!
Also take in to account that a lot of people will probably leave Jersey as a result of job losses in the finance industry, resulting in even less demand.
The houses in Jersey will gradually come back to a far more sensible and affordable level in 2 years or so.
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Hopefully the recession will mean people leave the island, like in the 80s and it becomes a better place to live again.
What is the betting that Dandaraland in St Helier becomes repossessionland as the prices of those flats plumet like in the city centres in the UK
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House prices in Jersey will drop 50% in the next 2-3 years, you heard it here first. TIMBER!
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It’s happening, baton down the hatches.
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