PROPERTY prices have continued to soar to new record levels – but experts believe recent interest-rate increases will soon bring an end to the ‘boom-time’ rises of the past few years.
A prolonged period of price rises has pushed the average cost of a three-bed house to more than £904,000.
But recent increases in the Bank of England’s base-rate – including the biggest single jump for 33 years – is set to squeeze the momentum out of the market.
Jersey mortgage adviser Peter Seymour, of the Mortgage Shop, said he expected the latest House Price Index to be the last report from Statistics Jersey ‘that will reflect increasing prices and such a high level of activity in the market’.
‘It takes some time for property transactions to pass through the system and we are still seeing boom-time transactions being passed,’ he said. ‘I don’t think that there is any momentum left in the market and we are going to start seeing a decrease in the number of transactions as well as an adjustment in house prices soon,’ he added.
Earlier this month, it emerged that Islanders on tracker or variable mortgages were now paying hundreds of pounds more than they were at the start of the year.
Mr Seymour said: ‘As a result of the rising interest rates and the possibility of prices falling, all lenders are scrutinising mortgages even more, dropping the accepted levels of lending from six times your salary to five.
‘As a consequence, a reduction in prices would have to be significant [to make a difference] for Islanders who are marking time.’
The housing report showed that the average cost of a home in the Island was more than £700,000 in the third quarter of 2022.
One-bedroom flats, two-bedroom flats and three-bedroom houses all reached their highest mean price to-date – recorded at £370,000, £557,000 and £904,000 respectively.
The average cost of a four-bedroom home remained essentially the same in comparison to the previous quarter – at £1,329,000 – while the average price of a two-bedroom house decreased by £32,000 to £632,000 over the same period.
The overall average price of a Jersey home stood at £709,000, more than doubling the UK figure of £294,000.
Housing Minister David Warr has said he expected prices to fall in the wake of rising mortgage interest rates, but that the ‘hard evidence’ for this was unlikely to be seen before the end of the year.
‘It is still early days and a lot of this data is stuff that has already been sold, mortgages that have been agreed – we haven’t yet seen the hit [to prices] that is going to come,’ he said.
‘The early signs are there but the hard statistical evidence is lagging behind.
‘I think that by the end of this quarter we will start to see evidence of house-price corrections,’ he added.
Michael Van Neste, the former head of social housing provider the Jersey Homes Trust, said that ‘no matter what prices homes reach’ they were still being occupied.
‘We can anticipate a levelling out and maybe a falling in house prices in the short term, but ultimately we don’t have enough homes.
‘That correction will probably assist a small number of people who can afford to buy, but will exclude a large number of Islanders who are unable to get on the housing ladder and who are sadly leaving Jersey in search of a better life,’ he added.
As well as those leaving the Island, Mr Van Neste said the situation would also negatively impact Jersey’s ability to attract staff.
‘We need nurses, we need teachers, we need care workers – we have to house them all,’ he added.
Frank Walker, chair of homeless charity the Sanctuary Trust, said that ‘drastic action’ was required to address the spiralling prices.
‘The simple answer is that this can’t go on, because if we continue to see people – predominantly young people – leaving the Island, that is going to bring our entire future into question, socially, economically and fiscally,’ he added.
However, he said he had ‘some hope for the future’.
‘With the approach that this Council of Ministers are taking, particularly Deputy Warr, there is a real optimism that this could be resolved,’ he added.
PRICES
Average house prices by property type
One-bedroom flat: £370,000 – £17,000 higher than previous quarter.
Two-bedroom flat: £557,000 – £21,000 higher than previous quarter.
Two-bedroom house: £632,000 – £32,000 lower than previous quarter.
Three-bedroom house: £904,000 – £51,000 higher than previous quarter.
Four bedroom house: £1,329,000 – unchanged from previous quarter.
