By KAREN SCOTT
Jersey Mortgage Lender, Investec Private Banking
Housing Market
shows resilience
The local Jersey housing market bucked the global trend and continued on an upward trend during 2007/8 and I think that we all thought these increases would last forever. This boom, was great for those people that were already on the property ladder, but not so good for those aspiring to purchase their first property.
First Time Buyer activity is crucial in keeping the housing market moving, with properties valued at under £500k taking up 60% of the market share here in Jersey, with those priced between £500k and £1m accounting for only about 30%. (Royal Court transactions only/does not include Share Transfer). Back in the day when the banks were pushing credit boundaries we saw the introduction of the 100% mortgage which was supporting first-time buyers and pushing the market forward. As credit parameters contracted, the 100% mortgage was removed and the banks started to require substantial deposits again. These factors, amongst other things such as job insecurity, led to a lack of confidence in the market and Jersey had to adjust.
c“These First Time Buyers are in many
Jersey within the financial services sector, returning expats, and High Net Worth’s seeking a lower tax base. Encouragingly we have also seen some growth in those individuals moving their business to Jersey from other jurisdictions. Another local initiative by the States of Jersey is the Jersey Homebuyers Shared Equity Scheme which has been in force for the last couple of years, and has been given to assist First Time Buyers to get on the property ladder - which as mentioned earlier is crucial to a buoyant property market.
ases resorting to the “bank of mum and dad” for their deposits.
”
Despite the global crisis Jersey has proved pretty resilient on the whole, albeit price growth has been flat over the last few years, not helped by high levels of stock in the market and overly optimistic asking prices.
We have seen a gradual improvement during 2014, which can be attributed to a number of reasons and in particular new active buyer groups that include either those relocating to
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The continued growth of global wealth management locally represents a compelling opportunity for Jersey’s economy. These factors will help drive the economy and we would expect this to lead to increased activity in high end housing transactions. This coupled with the fact that vendors are now pricing properties more realistically, leading to a more reasonable timescale for a sale than perhaps previously. There are still certain factors that may hold the market back, such as the minimum 10% deposit that is required by many of the banks for First Time Buyers. These First Time Buyers are in many cases resorting to the “bank of mum and dad” for their deposits. Another hurdle is the Mortgage Market Review (MMR), a new regulation which came into force in April 2014. Although mortgage regulation does not apply to us here in Jersey, lenders are still governed by their UK Head Offices and have to follow the strict guidelines of MMR. This new regulation is designed to ensure complete affordability for the borrower both now, and in the future including factoring possible future rate increases into the affordability equation.
MMR holds the lenders accountable for selling unaffordable mortgages and has been brought in to ensure that the days of easy credit are over. This new regulation is broadly welcomed by the market but it is inevitability causing additional work for underwriters and frustration
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