Our last update was created during the latter part of 2018. We have held back from providing our market update until such time that there was a clearer working picture on Brexit. This update takes a snapshot picture of the market over the past 12-18 months and provides our forecast and thoughts for 2020.
IN BRIEF:
The latter half of 2018 was from our perspective a little weak and steered primarily by continuous speculation on the outcome, if any on Brexit. Patience and energy were wearing thin and a slowdown in sales was prevalent across the board but primarily at the top end.
Our expectations for 2019 were concerning to a degree, with still no sign of any certainty, we expected a relatively flat / mediocre year from a sales perspective.
2019 kicked off with good sales at the mid end of the market as had been anticipated by us in previous reports; price ranges of between £300,000 to £800,000 had been the driving force of the market since June 16 and our view was that this would remain the trend for the foreseeable future. The rental market proved to be king in general and we had forecasted this; we had cautious buyers, but the flow of interest continued as the economy continued to grow – rentals proved to be the sensible avenue with the uncertainty surrounding us. Our management rental portfolio has grown by 40% over the period since 2017.
Bull or Bear…… or neither?
Over the period from late 2017 and very much into 2018, forecasting and generally pinning the market was a tough call. There has been no real continuous trend across the board which underpinned further our thoughts over the years on varying tiers in the market and mini segments within these tiers. What was emerging over this period was an adjustment in these four tiers (low / mid / high / upper high) of the market and certain segments within these tiers showing substantial growth, with others weakening.
So, bullish certainly from the middle market driven by real owner occupiers, but also real concern of a false market driven by speculation and expectation of which the story to date remains uncertain, in so far as end users and yes we are particularly referring to the studio market in general. More on this in our annual market update to be published Q2 2020.
The clear growth in prices across the mid end region principally the £300,000 to £700,000 price ranges during 16’ through to 17’, which we had expected and which saw increases in this sector of approx. 9% to an average market price level of £510,000, has flattened slightly with little to no price gain over the period. We are not surprised or discouraged by this and class it merely as a breather.
Our overall average on prices in general shows an increase; this is due to an increase in the sale of high end properties such as The Sanctuary, The Island and Buena Vista Park which have all bounced back in terms of actual sales. This turn around at the top tier has therefore increased our total average price level from approx. £625,000 in 2018 to £660,000 or approx. 6% which is in our view is a positive sign that the higher end which had seen a slow down since June 2016 is back to form and delivers new confidence to the market. Interestingly enough the below quote was written by us in 2018 in our previous annual market update.
“We continue to take the view that the upper 4th tier in the market has a great deal more to offer, but uncertainties surrounding Brexit negotiations will no doubt impact any immediate growth and further increases at prices ranges of above £1,750,000.“
In Summary
Q3&4 of 2018 as well as Q1&2 of 2019 was in fact a mixed bag with sales slowing a little in certain segments and values flattening in most areas, all countered by rentals going through the roof, and recording some of the best ROI’s we have ever seen – so a good period if you were a Landlord and confusing depending on where you sat in the market as vendor.
If you were a high value owner looking to sell, you may have waited a while and may still yet be waiting; by this I refer to the plus £2m market (upper tier). We believe this segment in the upper tier will likely see better days following some certainty with regards to Brexit and importantly a stronger and more stable UK Government.
Brexit – Our view and impact on the market
Our view in so far as political threats and our status goes, remains much the same as it always has been vis a vis Spain. We do not take a view that Brexit will adversely affect our relationship with Spain any more than it has over the past 50 years or so; in fact given the tax agreement and negotiations leading to this (borne out of Brexit), suggests that Gibraltar can and has moved its political position with Spain positively and continues to do so.
For further information on the market, please contact us on +350 200 51010 or info@bmigroup.gi
