Jersey's housing market reaches ten-year high

Thursday 16 February 2017

Rising prices, sales at a ten year high, and rates now on a par with London - Jersey's housing market appears to be booming.

According to the latest official stats released by the States, activity in the market went up by 17% in the last year.

In the last quarter, 406 properties were purchased, the highest recorded quarterly figure since 2006, with the biggest increase seen in the sale of two bedroom houses.

Number of dwellings included in the Jersey House price Index by property type

Not only was the last quarter the busiest for sales when compared across a ten-year period, but turnover across 2016 was 12% higher than the previous year.

States Statistician, Dan Edmonds said: “You’ve got to take into account that the population is a bit higher now so you’d expect a little bit higher (turnover) but that is only going to account for a very small proportion of the increase.”

The rise in turnover might be surprising to some as average property prices have increased for the third consecutive year.

According to the report, average property prices increased 4% in the last year, with the average price of a property being £468,000 compared to £450,000 in 2015.

Jersey House Price Index: quarter 1 2002 to quarter 4 2016

Mr Edmonds added: “It’s all very well, house prices going up but things will still remain affordable if your earnings are going up at the same time and in recent years earnings have been doing relatively positive things. We’ve been having three years in a row where average earnings have exceeded inflation, so in real terms people have done better in the last few years.”

The increase in property prices has put the Island almost on par with the average cost of property in London, with London having an average property price of £477,000; just £15,000 higher than average property prices in Jersey.

Whilst 2016 saw an increase in market activity that ultimately brought us more in line with the housing market in London, the same cannot be said for our neighbours in Guernsey.

The rate of property sales in Guernsey remained essentially unchanged between 2015 and 2016, demonstrating a distinct market difference between the two islands as Jersey’s rose 12%.

Property prices also appear to be lower in Guernsey with the average property costing £414,000, a 2.3% decrease when compared to 2015 and £66,000 lower than the average Jersey price in 2016.

Lorraine McLean, Mortgage Sales Manager, Skipton International, said: “The housing market was very busy last year so it’s no surprise to see that volumes are up this much.

“For property owners, there are only really two times when the price of a house matters – when they buy it and when they sell it, and with a housing market on the scale of Jersey, it’s important not to take figures for any quarter out of context.

“We would suggest that a growth rate of RPI + 1% would be ideal for a sustainable market that ensures property ownership remains within reach of more Islanders. A 4% rise is slightly above this and it’s important that house prices don’t accelerate more rapidly than earnings as this will not be in the long term interests of the property market.”

Annual percentage change in the Jersey House Price Index 1986-2016

Looking ahead at what we can expect from the future of the Jersey housing market, Mr Edmonds believes the Jersey economy will be the ultimate factor in deciding the direction of the market.  

“Fundamentally what is going to happen in terms of future years is going to be dictated by what the Jersey economy does. If the Jersey economy succeeds and we get real term GDP growth in next 3 or 4 years, the housing market is going to go in that direction.”