Everybody is talking about house prices. It feels like being back in 2007 again. Some of you might remember the good old days when house prices were on a seemingly ever-rising path to glory; but I bet plenty of you won’t.
One of the things I think makes a good estate agent is how much they know about what is ‘going on’ in their local property market. Who is listing what? What is coming onto the market and for how much? This helps us ensure the advice we’re giving is as up to date as it can possibly be – even more important in a rising market.
So, what exactly is going on?
We begin our story on March 24 2020 – the day none of us ever expected ‘Lockdown’. The Coronavirus Pandemic was upon us, case numbers had exploded across the world, and even on our beautiful little island, we all had to shut ourselves away, take our jobs and businesses home, and stay away from family, friends and loved ones to protect each other from the unknown.
How was it for you!? There’s nothing like sharing the kitchen table with your adorable kids whilst still trying to work. Or having to put the hours in whilst the weather gave us sunny day after sunny day. For some, it was like retirement but without a pension! Still, a lot of us coped. But I expect a lot of us didn’t too. Yet here we all still are. We managed to get through life pretty well despite the challenges.
What’s this got to do with house prices?
So, think about this. You’re locked down. Apart from essentials, you weren’t spending anything like the money you might normally have. None of us could travel so we didn’t spend any money on holidays either. I expect a lot of us were trying to get deposits back on trips that simply weren’t ever going to happen. You weren’t driving anywhere near as much. None of us were. Remember when the price of a barrel of oil was at $0.00!? A far cry from today’s prices.
Whilst I realise this isn’t unequivocal, the point here is that most of us had more disposable income than we were used to. We were spending far more time in our homes than we normally would. We were sharing space trying to balance life, work, and home schooling. A tough ask.
We were quickly recognising the shortfalls of where we lived and, crucially, how we lived. Some of us were lucky enough to have outside space. A great deal of us craved it, especially being locked down in such amazing weather!
We started thinking about moving house. We wanted, perhaps needed, something bigger. We needed a garden. We convinced ourselves that we needed another reception room if this ‘working from home stuff’ continues. The pandemic was battled on many fronts. Lockdowns, restrictions, travel bans – we sought to protect the vulnerable. And rightly so. But businesses, industry, our economy was supported by the largest financial support package in our history. Some might argue it didn’t go far enough – I believe most of us were grateful for the quick-thinking of our Government, the speed at which grants and financial assistance was rolled out and the wider implementation of support measures.
Don’t forget the Bank of England’s emergency reduction to the base rate of interest; near zero. Dreadful news for savers, but borrowing suddenly became even cheaper, encouraging us to spend on products, goods and services, including mortgages.
One word. Demand.
Pre-pandemic it was already starting to increase as a result of house prices being stuck in a period of limbo where little/no growth had been seen for over 10 years.
Coming out of lockdown we could never have expected quite how much. The problem on the Isle of Man, however, was stock. Or continuing the economic theme, supply.
Construction on the island had by and large slowed to a snail’s pace, affordable new build properties were not being produced in the numbers required, the immediate shift in the market caught us all by surprise including the island’s larger house builders.
There is of course another factor to consider; did property values on the Isle of Man reach a level that were too low in comparison to other parts of the UK? Let’s look at the broader spectrum, its easy to search for a four bedroom detached property in the middle of a village in the UK with no employment opportunities, infrastructure or future prospects to warrant an increase in property values and say “look what you can buy in the UK for the price of a two bedroom terraced house in the Isle of Man” but the reality is, the UK has experienced growth over the past decade and house prices have increased annually at an average of 5.7% per annum across the UK whilst here on our gem of an island we have remained stagnant, in fact prices detracted pre 2017.
The Isle of Man is an island of opportunity, it offers a quality of life rarely sought in todays World, it’s a spectacular place to bring up children and is one of the safest jurisdictions on the globe – it’s a privilege to live here, to work here, to raise children here and to be able to have the flexibility of owning a home without any restrictions unlike our counterparts in the Channel Islands where property prices are at an all time high that far exceed the values we are experiencing in the Isle of Man.
This takes me back to the question: Did values on our island drop below their true value? It’s not an equivocal yes or no answer but I believe if we truly look at the bigger picture, considering the factors above, the quality of life we experience here on island and the value this adds to our everyday
lives – it’s difficult to say answer no!
As we head towards Winter there is no doubting that rising fuel costs, rising food costs and the overall increase in the cost of living will take a hold on the pockets of plenty, the market may slow and noticeably we anticipate this will happen from the bottom up with lower value homes in the Isle of Man maybe not attracting the level of interest seen in the first half of 2022 – It’s impossible to predict the future of the housing market; all we can do at Black Grace Cowley is promise to keep you informed every step of the way.