Realtors brace themselves for a tough 2011

The departure of foreign workers combined with new lending restrictions from banks has contributed to a ‘softening’ of the market.

A house that sold for $1.3million in 2007 may now be worth as little as $1.1million, said Terry Lister, who owns and runs Seymour Realty.

The rental market is believed to have seen a similar decline in prices though definitive figures are not available.

Mr. Lister said uncertainty over employment meant people were less inclined to take on mortgages.

“People are concerned about their job prospects looking into the future so even those that are well positioned to buy are choosing not to. You have fewer people chasing the same number of houses and that forces the prices down.”

He said the ‘softening’ was happening across all sectors but particularly with properties over $1.5million, where banks have introduced tighter restrictions on lending.

Larry Dunlop, of Dunlop Realty, said: “The banks have taken 100 per cent financing off the table and that has affected people who may have had good secure jobs but no money for a down payment.”

Tightening up

Banks across the western world responded to the economic crisis — initially sparked by homeowners who were unable to pay their mortgages — by tightening criteria. Some banks now require a minimum 15 per cent down payment.

Arthur Jones, director of Bermuda Realty, said more ‘desirable’ properties were holding their value despite the downturn.

And he said he was optimistic that things would start to turn around soon.

“People have been more conservative but these things turn around.

“All of these things are cyclical. You have to look at what’s happening in other economies.

“Growth is coming back in the US. Bermuda may not yet have caught up in terms of unemployment but it would make sense that the rebound in the U.S. will follow through to us.”

Mr. Dunlop was less optimistic.

“When you look at AWAC letting people go and the Newstead going into receivership. I wouldn’t say we are out of it yet.”

Mr. Lister, who is also a Government minister, added that ‘from a realty point of view, there was no indication of an upturn yet.