Despite seven interest rate hikes by the US Federal Reserve, 2022 was the second most active year for property sales in the Cayman Islands, as the average value per transaction reached a new peak, data from the Cayman Islands Real Estate Brokers Association (CIREBA) shows.
The total of US$972 million in properties sold last year only trailed the record of $1.08 billion set in 2021.
The average transaction value of US$1.13 million in 2022 was 11% higher than a year earlier.
Presenting the statistics on his website, Michael Joseph, broker/owner of Property Cayman, said this reflected real estate transactions in the United States, where the number of home sales was forecast to drop 16.1% in 2022, whereas the average value of a median home was expected to grow by 9.6%, according to the National Association of Realtors.
In Cayman’s residential market, the data shows 605 transactions last year, a decline of 11% compared to 2021.
Residential properties for sale are on the market for an average of 313 days, 27 days more than a year earlier.
The average residential property sale value increased by 9% to US$1.32 million in 2022.
Land sales declined by a third, to 246 transactions and the value of the average land sale fell marginally (-2%) to US$456,900.
Joseph said despite the high figures last year, the market is recalibrating.
Housing supply is seeing an uptick after one-and-a-half years of record housing scarcity.
There were 1,037 active listings during the last week of 2022, compared with 688 at the same time in 2021.
This comes close to the pre-pandemic housing stock levels, but historically the supply of available homes has been up to double that amount.
Cayman feels impact of global economic slowdown
External economic factors have begun to affect more of his clients, Joseph wrote, as rising interest rates, inflation, volatility in the capital markets and the war in Ukraine have combined to slow the economy generally, impacting those who require financing.
“Initially, it was really those needing to borrow who were most impacted by inflation and subsequent interest rate hikes. However, we’ve now started to see the impact on just about everyone, regardless of income or type of property.”
This had led to some softening of prices or required more patience from sellers. It also caused more hesitant buyers as acquiring financing has become more difficult, he added.
It may also lead to higher rental rates, Joseph wrote, as the inability to get financing to buy a home could lead to more demand in the rental market.
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