Research article

Residential markets

The Jersey residential market is buoyant, while Guernsey’s is beginning to show signs of picking up following recent price falls

Guernsey and Jersey have long attracted individuals from the UK and beyond who seek a high quality of life in a business-friendly environment.

Both islands have regulations in place on who can buy and occupy property. In Guernsey, 1,600 properties, or 6% of the island’s housing stock, are classed as ‘Open Market’ and available for any UK or EU national to buy. The rest are for those born locally or those with an employment license.

In Jersey, those who are not locally born may qualify under the High Value Residency system, which requires a minimum annual tax contribution of £145,000. In addition, Jersey has a system in place for non-locals deemed essentially employed.

Thanks to a strong, high-value economic base, the islands’ residential markets proved resilient during the global financial crisis. Prices in Jersey, grew quickly to a peak in 2008, and remained at a high plateau. Prices in Guernsey rose steadily to a peak in early 2015. Performance in the two islands has since diverged (see Figure 11).

Figure 11

FIGURE 11Residential prices

Source: States of Guernsey, States of Jersey, UK Land Registry

Recent performance

Fuelled by further economic growth and in-migration, residential prices in Jersey have risen consistently since 2014, up a further 2.5% in the year to Q3 2017. Just over 1,300 properties transacted in 2017, 3% fewer than 2016, but 5% more than 2015. This equated to a total spend of £837m, an increase of 3% over 2016 levels.

Transaction growth was seen at the top end of the market. £1m+ sales increased by 3% overall, while the £2–3m and £3m+ markets saw growth of 26% and 45% respectively (see Figure 12).

Figure 12

FIGURE 12Jersey residential sales by price band (2017) and annual change

Source: Royal Court of Jersey

In Guernsey, affordability constraints coupled with slower economic growth have contributed to price falls 12% from an early 2015 peak. Prices have stabilised in the last year, however, and transaction levels are now rising once again, indicating that a return to growth may be imminent.

Activity in Guernsey’s Open Market remains muted, but a proposed new tax cap may yet stimulate demand. Effective from 2018, new residents purchasing an Open Market property that yields at least £50,000 document duty (£1.5m+ in value) would receive a Guernsey tax liability cap of £50,000 per annum, applicable for four years. The usual upper limit cap is £110,000 and £220,000.

Residential market outlook

Historically expensive by UK standards, strong price growth in London and parts of southern England since 2012 have seen prices catch up (and in some cases overtake) those of the Channel Islands – in spite of recent softening in the UK. This makes the Jersey and Guernsey markets appear better value to those looking to move to the islands, whether it be for business or lifestyle, or a combination of the two.

At the top end of the Jersey market, and in Guernsey’s Open Market, future performance will depend on the islands’ ongoing appeal to high net worth individuals as a place to live and build a business. The islands are proactive in this respect, with Government-funded organisations such as Locate Guernsey and Locate Jersey promoting the islands internationally and assisting individuals. Guernsey’s proposed new tax cap for Open Market buyers suggests a recognition of the need to remain competitive at an international level.

Jersey has seen average net migration of 1,000 people per annum over the last three years. Forecast population growth in the island will continue to support growth in the market. Affordability in both islands is increasingly squeezed, however, and in the mainstream markets this may slow price growth over the longer term.

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