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Market Commentary
A department by department overview of the Guernsey market in 2011
Local Market
Swoffers’ local market department enjoyed its most successful year to date. Director Spencer Noyon gives his view on the last 12 months and looks ahead to what 2012 might hold...
Local market properties remain a solid investment.
That was the underlying message in a relatively buoyant housing market last year. Guernsey's local property market remains strong after a busy 2011. Even though 2011 felt like a difficult year from start to finish, the bare facts at its conclusion was that market prices generally remained in line with those of 2010, whilst the number of property transactions was up about 6%. In the process, Swoffers enjoyed its best year ever in terms of local market sales.
Although we never really anticipated a buoyant year, it is fair to say that we were more than pleasantly surprised. The conveyancing court has undoubtedly been busier than any agent could have reasonably predicted. Across all price ranges we have seen a continuing confidence in the market, against a backdrop of economic difficulties worldwide.
In 2011 and into 2012 agents are reporting a general shortage of properties in the first-time buyers' sector and beyond – indeed there is very little available to buy up to £400,000 at the moment. Part of this is undoubtedly due to investors having previously bought these properties as a safe haven for their money and the yields are such that there is no incentive for these owners to sell at this time. At the same time, those owner occupiers who might want to move up the property ladder are finding it tough to borrow more money, particularly when they have insufficient equity or savings to make a major move upwards.
There is still some reticence by banks to lend as actively as they used to and we do not expect this to change going forwards into 2012.
This low stock level ensured a ‘vendors’ market’ with many properties sold before they reached the market place.
As a company we tend to operate best with 200 properties on our books but we have seen this figure as low as 130 this year. This is where an estate agent really comes into its own and where expertise and market knowledge takes over. As agents we have been able to associate properties with prospective buyers before we have even taken details or advertised them more publicly. At the other end of the market, Swoffers have enjoyed a hectic few months successfully negotiating the sale of several £million-plus sales.
During the course of the year, there were over 20 £million-plus local market sales and Swoffers continued their dominance of this area, securing 60% of these deals for their clients. Property prices have held their own where UK and European prices have faltered, further evidence of just how robust the Guernsey local market remains. 2012 will, we believe, be a much harder marketplace.
There is undoubtedly uncertainty and nervousness as to where the year is going to take us with such big issues globally and locally – in the case of Guernsey we have 0-10 tax decisions to make; Government elections; LCVR challenges; and of course the population review to overcome, all against the backdrop of bigger, economic issues which are beyond our control. Hopefully our local market will be as dependable as ever.
Open Market
Open market Swoffers secured incredible results in a demanding 2011 which will certainly go down as a difficult year in estate agency with the global economic downturn leaving people concerned about their futures and their assets.
Managing Director, Matthew Henry says ‘I am proud to announce that Swoffers have ridden the storm better than most with our company securing the sale of almost 70% of all Open Market properties sold in 2011.I am confident that our solid reputation based on years of experience has helped us to triumph where others have not.’
Less Open Market properties than usual were sold in 2011 but with events worldwide having a knock-on effect to almost every corner of our planet perhaps we should have expected that our small Island would not come out unscathed.
The year saw a steady trickle of new people coming to the Island to take up residence with the remaining sales being to those already based here taking the opportunity to move house. ‘It is fantastic for the long-term picture to see Open Market vendors who are already established here looking to trade up – this is the clearest indication that there is deep-rooted confidence in the market and living in Guernsey,’ he added. ‘Ultimately it comes down to a quality of life and, as well as the more obvious financial benefits, living in Guernsey brings with it a unique lifestyle. ‘Many high-net worth individuals or personalities crave the anonymity that Guernsey offers and it is important to them to be able to move to a new home without intrusion of their privacy together with the benefit of a gentle tax regime.’
2011 has also seen a higher uptake in the purchase of properties for investment, a trend which has included not only Open Market properties but sales on the local and commercial markets with people deciding to diversify their portfolios in the hope of finding better stability in bricks and mortar than in returns from other investments. Just under £75m worth of Open Market houses exchanged hands last year with prices ranging from £6.1 million to £450,000. Coincidentally both of these were apartments, needless to say, at opposite ends of the spectrum! Just over a third were homes below £1m whilst a similar number were sales between £1m and £2m leaving just under one third to be sold above the £2m mark with some reaching as much as £3m to £6m.
Mr Henry continues ‘I am sure that 2012 will bring new challenges but I’m confident that with the continued hard work from the excellent staff we have put together over the years Swoffers will be more than capable of providing our clients with the same high standards they have come to expect from us in the past.’
Rentals
Yet again, in 2011 we have enjoyed an active year with Swoffers’ highly experienced rentals team seeing an increase in both Open and Local market rental activity - a trend that looks set to continue in 2012.
‘Overall, the market has been extremely busy in 2011. We have been renting a very wide spectrum of properties on the Local Market priced between £800 to over £4,500 per month. “It is a hugely diverse market and we aim to cater for all categories of tenants though it has sometimes been difficult to offer high end local market homes due to lack of supply” explained Sue Nicolle. The Open Market was similarly diverse with properties ranging between £2,000 and £10,000 per month being offered last year and a great many of them being taken up at close to the asking price.
The Local Market had a very strong first three quarters of 2011 with a slight lull towards the end of the year. Strongest demand was in two sectors of the market; both the “3 habitable room” option which may be occupied by licence holders with a Housing Licence requirement in excess of 150 TRP units and the high TRP family home which is favoured by licence holders who have a family and/or pets to accommodate. Once a property became available on the rental market, we had a handful of suitable candidates available for viewings and in most cases one of these would result in a contract being signed. These two property types made up the majority of the market which was led by licence holder demand (rather than the local populance) - a trend which is still continuing into 2012.
As a result of this there continues to be a need for family homes and properties with a high TRP which will suit licence holders moving within, or to the island. The flexibility of allowing pets is also something that is increasingly sought after by people relocating.
As seen in previous years, one of the busiest aspects of the local market has been an increase in the number of people willing to become Landlords by investing in property. There is still a general disinclination to invest in the financial markets where returns have been pretty unimpressive. With forecasts for this year remaining uncertain we are sure it is a trend which is set to continue. The message is still quite clear – property remains a good long-term investment that typically at the moment provides a 3-5% rental yield.
At the beginning of this year we are still seeing high numbers of new applicants searching for the right property. If homes are offered at realistic prices they are commonly being rented without delay which makes us confident that 2012 should prove to be a buoyant marketplace.
