Jersey’s HNW Appeal Channels Prime Price Growth
Note: This Story was originally published on Prime Resi.
There’s been a notable pick-up in activity at the top-end of Jersey’s residential property market, reports Knight Frank, with 84% more £1m+ deals going through in the first half of this year compared to the same period in 2017.
£1m+ sales accounted for more than 10% of the island’s total resi market activity so far in 2018, up from just 5.6% in the previous year.
Property prices in Jersey have been rising since early 2015, in the longest period of sustained annual price growth since 2009. After rising by 6.5% in the year to June 2018, the average price of home on the island now stands at £480,000; that’s 12% above the previous market peak, according to data collated by Jersey Statistics.
Just over 800 properties transacted in the first six months of 2018, which is roughly in line with the comparable figure for 2017 – but is 16% more than the same point in 2016. It’s the higher-value brackets that are seeing the most change, though. Knight Frank reports that the number of £1m+ deals increased by 84% compared to last year, while there were 19 sales of homes valued at between £1.5m and £2m over the same period – an increase of 73%. Sales of homes priced above £2m increased by 46%.
Population growth and a “favourable business environment” (aka low tax) are two of the key factors driving property price inflation, says Knight Frank. Net inward migration has averaged 1,300 people a year since 2015, taking the total population on the island to an estimated 105,500.
Jersey’s “High Value Residency” programme – which applies to people buying or leasing a property worth over £1.75m – has attracted a fair few HNW types to the island recently, prompting at least some of those £1m+ home acquisitions. In 2017, Locate Jersey (the Government-backed organisation charged with promoting the island internationally) approved 34 HVR applications – a record for the island, and more than twice as many as in 2016.
“Around 20% of applicants in 2017 were 25-40 years old, 60% between 41 and 59 and 20% over 60,” Kevin Lemasney, Director of High Value Residency at Locate Jersey, told Knight Frank. “Three years ago only 5% fell into the younger category, meaning that the demographic of those relocating to Jersey is very different from a decade ago.”
High-net-worth individuals who qualify for the scheme are taxed at 1% after they have paid an annual minimum tax contribution of £145,000. Successful applicants are granted “entitled” status on the island which is necessary for those wishing to buy a property. There is a separate system in place for non-locals who are “essentially employed”.
Aimee Sinclair-Horgan, Partner at Wilsons Knight Frank:
“The residential property market in Jersey has performed well over the last few years. Both the prime and mainstream markets have witnessed strong price growth as a result of a shortage of new supply, an expanding population, a strong economy and a robust employment market.
“This has been particularly evident in the prime market, where we have agreed a number of noteworthy deals over the last 12 months. The official figures confirm our view, with the numbers pointing to a notable pick-up in activity for homes valued at between £1m and £2m, and £2m+.
“This rise in activity has been supported by an increase in the number of good-quality, well-presented homes being offered for sale – whether it be rural farmsteads, country manors, new-build houses or town centre apartments.
“Currently some of the strongest demand we are seeing is for property for the first-time buyer market, and homes valued at up to £1m. Properties located close to good schools, shops, restaurants and other amenities remain in highest demand.
“Rising demand will help to support pricing, a trend that we expect will continue into 2019.”
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