Rabin Killed: A Peace Champion Falls as Jamaica’s Housing Market Endures a Difficult Year — December 1995

Publication Date: 3 December 1995 | Coverage Period: 3 November–2 December 1995 | Category: Monthly Review

Month in Brief

• 4–5 November 1995: Israeli Prime Minister Yitzhak Rabin is shot at a peace rally in Tel Aviv on the evening of 4 November and dies of his wounds in the early hours of 5 November. The world mourns; the Oslo peace process is plunged into uncertainty.
• Bank of Jamaica base rates remain elevated at approximately 40–50%; no indication has emerged of a near-term reduction. The financial system continues to operate under conditions of considerable stress.
• NHT loan approvals for the period show modest but positive activity, predominantly in the lower-cost housing bands; the Trust remains the sole meaningful source of mortgage finance for the majority of Jamaican households.
• The Jamaican dollar continues to trade in the J$33–36 per US$1 range; the pace of depreciation has moderated slightly but the structural direction remains downward.
• Commercial banks report continued caution in real estate lending; non-performing loan portfolios in the sector remain a source of concern for regulators and depositors alike.
• Year-end land registry data is expected to confirm 1995 as one of the most depressed years for formal property transactions in recent memory.

Housing Market

November 1995 brings the housing market to the close of a year that will be remembered for its difficulty. Transaction volumes across all segments have remained near cyclical lows since the spring; the brief optimism that attended early 1995 — when some analysts hoped that rate normalisation might be approaching — has dissipated. The environment entering December is characterised by resignation rather than panic: sellers have largely adjusted their expectations, buyers with access to NHT finance continue to transact at measured pace, and the broader market waits.

In Kingston’s established middle-class districts — Liguanea, Half Way Tree, Mona and environs — residential sales activity has been modest but not absent. Properties with clear title, good condition and realistic pricing have found buyers, typically NHT-eligible professionals or cash purchasers. The upper end of the market — Cherry Gardens, Norbrook, Beverley Hills — has seen fewer transactions; the pool of buyers capable of executing acquisitions at this level without mortgage support is limited, and those who qualify tend to be unhurried.

Portmore and the broader St Catherine corridor continue to represent the most active segment by volume, almost entirely driven by NHT activity. New completions in NHT-approved schemes attract significant waiting lists, and the Trust’s ability to fund completions against its contribution base remains the binding constraint on market activity in this segment.

Government Policy

The government enters the final month of 1995 without having delivered a material change to the housing finance landscape. The Bank of Jamaica’s rate posture reflects an assessment that inflation and exchange rate pressures require continued monetary discipline; housing market costs are an acknowledged casualty of this stance. There is no indication that policy will shift in the near term.

The NHT continues to manage its resources carefully. The Trust’s mandate — to provide affordable housing finance to contributors across the income spectrum — is not in question; its capacity to meet that mandate in an environment where demand comfortably exceeds funding availability is the persistent challenge. The government has not announced additional capitalisation for the Trust, and the existing contribution framework constrains its lending envelope.

Construction Sector

Construction activity in November reflects the sector’s constrained circumstances. Private residential development remains essentially limited to schemes with pre-arranged NHT offtake; commercial office and retail development is subdued; and infrastructure investment continues at the pace determined by government budget allocations. The sector’s difficulties are compounded by imported materials costs that have risen with the exchange rate and by the general difficulty of obtaining working capital finance at rates that project economics can support.

Building contractors report that the year-end period typically brings a modest uptick in smaller residential works — extensions, renovations, repairs — as the diaspora returns for the Christmas season and funds family improvement projects. This informal flow of diaspora capital into the construction economy is not captured in formal statistics but is material to the livelihoods of tradespeople across the island. The Christmas-season remittance surge is anticipated with more than usual interest this year.

Investment Outlook

As 1995 draws to a close, the investment case for Jamaican real estate is best framed in long-horizon terms. Current pricing — soft in nominal Jamaica dollar terms, deeply discounted in US dollar terms relative to any recent historical benchmark — represents an unusual entry opportunity for investors with patient capital and foreign currency income. The absence of leverage from the commercial banking system is a constraint, but it also limits the downside risk of forced selling; a market where buyers pay cash is a market that does not experience the cascading distress of a credit-driven correction.

Land banking — the acquisition of well-located undeveloped or underdeveloped land for holding and eventual development — appears to offer the most attractive risk-adjusted proposition for dollar-denominated investors. Carrying costs on undeveloped land are relatively low; the option value of land in areas of likely future demand is real; and the downside is limited to the opportunity cost of capital deployed. This is not a strategy for the impatient, but for those with the resources to execute it, the current environment may be remembered as having offered exceptional value.

Diaspora Perspectives

The assassination of Yitzhak Rabin on 4–5 November has reverberated through Jamaica’s diaspora communities in ways that may not immediately appear obvious. Jamaica’s connections to Israel — through business, through the Jewish community that has been part of Jamaican life for centuries, and through the broader diplomatic relationship between the two countries — give the tragedy a local dimension.

In the United Kingdom, where Jamaica’s largest diaspora community resides, the Rabin assassination has been front-page news for weeks. The Israeli-Palestinian peace process had been regarded with cautious optimism across the British political spectrum; the loss of its principal architect, murdered by a fellow Israeli opposed to the Oslo accords, has injected a note of grief and foreboding into international affairs that will shadow the coming year. For Jamaicans in Britain — many of whom have lived through decades of watching global politics from a distance — the assassination is another reminder of how fragile the projects of peace and reconciliation can be.

The practical implications for Jamaica’s diaspora property decisions are indirect but not entirely absent. Geopolitical instability affects investor confidence in international markets broadly; periods of global uncertainty tend to increase the attractiveness of tangible, local assets. Some diaspora Jamaicans who might otherwise deploy capital in financial instruments may look again at Jamaican real estate as a relatively stable store of value in an uncertain world.

Affordability

The year-end affordability picture for Jamaica’s housing market is unchanged from the conditions that have prevailed throughout 1995. Commercial mortgage rates at 45–55% per annum remain prohibitive for the large majority of households. The NHT’s subsidised rates — the effective floor for meaningful homeownership access — continue to be rationed by the Trust’s contribution base and administrative capacity.

A review of 1995 as a full year makes clear that the gap between what Jamaican households can afford to service and what commercial lenders require has never been wider. That gap is the defining feature of the current market. Until interest rates normalise — a process that monetary economists estimate could take several years given the structural factors in play — the NHT’s role will remain central, and the aspiration of market-rate homeownership for the broad middle class will remain deferred.

Looking Ahead

The final month of 1995 will be dominated by the Christmas season — the diaspora homecoming, the remittance surge, the informal construction activity that this annual influx generates. January 1996 will bring a clearer picture of where monetary policy is headed and whether any of the banking sector’s difficulties will resolve or worsen. This publication will assess the full year in its January edition and look ahead to what 1996 may hold for Jamaica’s housing market.

The loss of Rabin — a leader who spent his later years pursuing peace at personal political cost — is a sobering note on which to close November. It serves as a reminder that the conditions within which markets operate are shaped by political realities that extend well beyond the island, and that the diaspora communities whose remittances sustain Jamaica’s economy are themselves embedded in a world of considerable complexity.