High demand and limited supply drive up prices

High demand and limited supply drive up prices

24th May 2018

The latest Jersey House Price Index statistics released today report large increases in the value of local homes. The average price of homes on the Island has risen by 6% in the last quarter and by 12% when compared to the first quarter of 2017. Turnover of properties was down, suggesting that price inflation is the result of demand outstripping local supply. 

While Skipton International view the level of price increases as unsustainable, it is urging Islanders not to take these quarterly statistics in isolation. For those looking to move, it remains a great time to put your home up for sale, with a ready market of buyers.

Most property types rose in value in the first quarter of this year, with only one-bedroom flats dropping marginally in price from the final quarter of 2017. Four-bedroom homes saw the largest increase in value, with the average home of this size now costing £949,000, a sizable increase of £114,000 from 2017.

Lorraine Mclean, Mortgage Sales Manager, Skipton International said: “Our experience shows that there is currently a lot of demand for property, especially those looking to move up the ladder from small flats to larger homes. This coupled with a lack of supply of these properties is greatly driving up their prices.

“There have been suggestions that we are experiencing a boom in the market, similar to that of 2007 prior to the crash, but we believe the market is different now. The mortgage industry has moved on greatly since then and stricter lending criteria means home owners are in a better position to weather changes to the market. However, we do not wish to see house prices continue to rise beyond people’s affordability. Growth has to be gradual and maintainable.”

This quarter also saw a large increase in the number of high value two-bedroom flats sold, the largest rise since 2012. In particular, the proportion of transactions for higher-end flats over the value of £550,000 more than doubled from the previous quarter. This may have been driven by the completion of luxury apartment developments on the Island, distorting figures for this quarter when viewing the market as a whole.

Skipton International has offered residential mortgages in Jersey for over 13 years and has completed over £500 million of loans in the Island. It was awarded the Feefo Gold Trusted Services Award 2018, the second year running it has received the award for its outstanding levels of customer service.