COMPLEXITY OF FORECASTING
Forecasting is quite famously a complex game, and the past years have made this truer than ever; a global pandemic was unforeseen, but the housing market defied all expectations in 2021.
In 2022, we’re facing a war in Europe, rising inflation and a knock-on effect on the cost of living. For more than a decade, the Channel Islands have enjoyed relative stability and been regarded as safe ports in global storms. We’re all hoping that this micro-climate continues, but we can’t take it for granted.
The latest data from the islands’ governments shows shifting prices in the market, which in reality look like the beginning of prices returning to pre-Covid levels.
There was an interesting article recently posted stating ‘Jersey’s booming housing market could be showing tentative signs of cooling’ but we do need to rationally ask cooling from where? The point where we all knew it was inflated? Covid wasn’t rational, nor were the effects it had on the property market
We understand vendors are still craving peak 2021 prices, but the reality is, that ship has sailed for most. If your home is entirely unique, well-constructed, desirably situated or even a site to build on - you probably still have some potential buyers willing to pay what it takes to secure it. Of course, location and quality are subjective, so tread carefully here and seek advice.
So, if we are currently at pre-Covid levels, where are we heading next? I’ve already said how difficult this is to predict, but economists are having a go.
In the UK, predictions suggest that mortgage rates will peak in the first half of 2023, and 2024 will see a year of recovery and growth. Towards the end of 2024, it has been suggested that interest rates should settle - quite possibly at around the current levels - still higher than those who have bought a home in recent years have been used to. But like so many changes in our lives, it will simply become the ‘new normal’ and something to ‘factor in’ to transactions.
STABILITY TO ATTRACT NEW RESIDENTS
With the news that Liz Truss has been chosen as the new leader of the Conservative Party, and therefore the Prime Minister, the UK picture could change somewhat.
She has promised a ‘bold plan’ to cut taxes so it will be interesting to see how the HNW UK community reacts to whatever actually happens. We all know the UK property market doesn’t react well to political and economic uncertainty and could well strengthen our offering in the islands for HNW relocation to those seeking greater stability.
We’ve just invested in advertising within the Guernsey and Jersey special editions of Country Life (currently estimated global readership of 400,520) to continue attracting new residents to the islands and ensure brand awareness within the UK HNW community.
The islands’ attraction is enhanced by greater workplace flexibility and revised expectations on where people can work from. We’ve seen a surge of younger buyers move to the islands with their active families - a considerable amount also bringing their businesses that offer local recruitment and/or future growth to add diversity to the islands - particularly in the Fintech/digital space. Thanks to timely and insightful investment, Jersey’s full-fibre broadband network has been listed at the very top of the cable.co.uk World Broadband Speed League 2021. Fibre is also being rolled out to every home in Guernsey, which will have full fibre broadband connectivity by the end of 2026.
This has proved to be a big draw for new residents working in the digital space and my prediction is for continued growth in the HVR/21E and Open Markets.
EXPOSURE IN THE RIGHT PLACES
In a dynamic market such as this, vendors must engage an experienced agent with a proven track record to find ready, willing and able buyers and achieve the best possible outcome.
By using a larger agent with market presence, you’ll instantly get a greater volume of potential buyers - and that is what you need in a changing market. It is unlikely that a smaller agent will be able to expose your property to the maximum number of people looking in the given sector. It only takes one buyer, but for water to find its own level, you need enough water in the glass to see clearly.
From 1 January to 4 September 2022, our vendors and landlords have received 2,373,588 page views on our websites. In Jersey, our brand is gaining good momentum with a 74.2% New Visitor statistic and 25.8% Returning Visitor on our website. Although heading towards 20 years in business in Guernsey, we are still actively working on creating new business with a 72.8% New Visitor and 27.2% Returning Visitor statistic.
The traffic that we drive towards our listings is for the benefit of our vendors - ensuring that their property is seen in the best possible light by every possible known buyer or tenant. We’ve also created a brand that covers all age demographics. In Guernsey we do not advertise within the local paper, but we still have a great, balanced capture of the 65+ age range which falls in line with our investment in digital promotion. It’s safe to say, with a talented creative and PR team, every move we make is to ensure the properties we represent are seen by the right people.
So, what does this mean for our vendors and landlords? For some it may sound like jargon, but the reality is, if the market is heading into more complex times you have to choose your agent wisely to ensure your property gets the attention it deserves and is given every opportunity to meet your expectations on achieved price.
WHAT’S THE TRUE VALUE?
Finally, think about the value of your property. At Livingroom, properties are valued based upon completed comparable sales, NOT against our competitors’ active and un-proven and un-sold listings. Any vendor should be asking questions as to how a market appraisal figure is reached, what sold properties were used in comparison with evidence of proven fact rather than ‘simply putting a finger in the air’ - which helps nobody, least of all the vendor.
Talking candidly, what we witness daily is other agencies putting ‘aspirational’ figures on property simply to seek instruction. Not only is this dangerous, but it poorly represents the island markets. This may have worked for some through recent times where the market has been somewhat erratic but nine times out of 10, the only people to miss out will be the vendors who lack that initial (and vital) launch when all eyes are on new listings at carefully derived and substantiated amounts - that surveyors and banks will support.
It doesn’t take a rocket scientist to predict that banks will tighten up their offering in the coming months and crazily aspired values will fall at the first hurdle for those seeking mortgages/loans to purchase.
My advice is to ask any agent you may choose for proven evidence of comparable SOLD property to understand if their market appraisal figure is justifiable - you’re well within your rights to know. After all, knowledge is everything, particularly when handling your largest asset.
Currently, in the Channel Islands, we’re lucky - there are still plenty of buyers looking for property, but they’re savvy and now driven by UK media reports, they are cautious too.
Are you currently building a new property? You might want to note that on 19 July, Britain’s hottest-ever day, portal searches for homes to buy with air conditioning nearly quadrupled (+280%) and nearly tripled in the rental market (+180%) compared to 2021. Perhaps it's time for developers to think about air-conditioning?
In changing markets, communication is everything so we’re going to keep writing, providing good evidence and stick to our ethos of making the industry more transparent – it is a belief in facts that has enabled us to establish Livingroom as the one and only Channel Island estate agent. The team are always on the end of a phone or email so get in touch, we’re here to help.