JUST under half of all flats sold in the first quarter of this year were bought as buy-to-lets, second homes or holiday homes, according to the latest house price statistics, as the average value of a two-bedroom flat rose by £21,000 to £556,000.
Released yesterday by Statistics Jersey, the latest House Price Index showed that 251 properties were sold between January and March this year – 36% of which were not purchased as the buyer’s main residence. In all, 17% of properties sold went to first-time buyers. A total of 49% of flats purchased were not the buyer’s main residence, with 22% purchased by first-time buyers.
This data has been provided for the first time due to the introduction of a higher rate of stamp duty paid on second homes.
The data comes amid widespread concern about the cost of owning a home and the inability of many Islanders – and especially first-time buyers – to get onto the housing ladder. Anecdotally at least, that is said to have led to many people leaving the Island, fuelling fears about a worsening dependency ratio of people in work compared to those who are retired, and the more immediate impact on the economy. The issue of the effect on the market of investors has been raised by several States Members, especially Reform Jersey Deputies, who have sought to limit the number of properties that can be sold to them.
Reform argued successfully to stop foreign investors being able to buy flats in the Jersey Development Company’s scheme at South Hill.
Overall, the mean price of one-bedroom flats, three-bedroom houses and four-bedroom houses all decreased in the first three months of this year compared to the previous quarter, while two-bedroom flats and houses saw an increase.
The largest quarterly decrease was seen in the price of one-bedroom flats, with the mean price falling by 12% from last quarter.
The report also revealed that total transactions of houses fell to their lowest level since at least 2002 in the first quarter of this year – 26% less than the same point the year before.
Moreover, 45% of property transactions were properties from new developments ‘sold off-plan several years ago at prices that are now below the current market value’, impacting average turnover and price levels.
If the new developments were excluded from analysis, the number of properties sold in the last quarter would be 55% lower than in the first quarter of 2021.
Harry Trower, director at Broadlands Estate Agents, said that the latest figures were not a surprise. He said: ‘If anyone was surprised that this has happened, they haven’t been paying attention.’
He did admit, however, that he was ‘shocked’ to read that the turnover was worse than in the aftermath of the 2008 financial crisis.
The downturn, according to Mr Trower, is ‘100% an affordability issue. Mortgages are so much more expensive than they were even a year ago. The cost of a mortgage is three or four times was it was last year.’
He noted that rising interest rates on mortgages and the cost-of-living crisis was ‘almost like a perfect storm. Something has to give. Either no one buys, and we sit here in purgatory, or prices need to come down.’
Mean Property Prices
£337,000 ↓ (Down from £383,000)
£556,000 ↑ (Up from £535,000)
£649,000 ↑ (Up from £635,000)
£815,000 ↓ (Down from £883,000)
£1.299m ↓ (Down from £1.387m)