Holness Takes the Helm: A New PM and Jamaica’s Housing Agenda at a Crossroads — November 2011

Publication Date: November 3, 2011 | Coverage Period: October 3 – November 2, 2011 | Category: Monthly Review

November in Brief

• Andrew Holness sworn in as PM October 23; Bruce Golding steps down after turbulent tenure
• Holness, at 39, becomes Jamaica’s youngest prime minister; snap election announced
• Housing agenda thrust into campaign spotlight as election nears
• NHT maintains mortgage approvals; awaits policy direction from new administration
• Eurozone contagion fears escalate; Italy yields spike to record highs
• Construction sector in holding pattern as political transition creates short-term uncertainty

Housing Market Overview

The October-November period has delivered one of the most consequential political transitions in Jamaica’s recent history, and the housing market — always sensitive to policy signals — is paying close attention. The resignation of Prime Minister Bruce Golding on October 23 and the swearing-in of Andrew Holness as his successor on the same day closes one chapter of JLP governance and opens another whose duration is, as of this writing, uncertain.

Market activity in October was characterised by the cautious stability that has defined 2011’s trading patterns, with modest transaction volumes in the Corporate Area and the established suburban markets of St. Andrew, St. Catherine and St. James. The announcement of a snap election — which Holness has now signalled is imminent — introduces a pre-election dynamic that historically generates both housing-related promises and a degree of buyer hesitation as households await clarity on the policy environment.

Prices in the middle-income segment have remained broadly stable over the October period, with no significant movement in either direction. The J$8 million to J$20 million bracket continues to be the segment most directly served by NHT financing, and demand within this range remains firm even as transaction velocity is below what the demand fundamentals would suggest at equilibrium. The supply constraint — not the demand constraint — is the binding factor in this segment.

Government Policy: Transition and the Housing Agenda

Andrew Holness brings to the prime ministerial office a biography that is in many ways shaped by the issues at the heart of Jamaica’s housing challenge. Having served as Opposition Spokesperson on Housing and Land Development before taking the Education portfolio, Holness is familiar with the NHT’s institutional mechanics and the structural barriers to expanding housing access. His personal narrative — as a product of a modest background who pursued education as a path to advancement — resonates with the aspirations of the lower-middle-income Jamaicans who form the core NHT beneficiary population.

With a snap election now on the horizon, the new Holness administration faces a compressed window in which to articulate a housing vision that can differentiate it from both the Golding years and the opposition’s emerging platform. The JLP’s positioning on homeownership and NHT expansion will be scrutinised against the PNP’s own claims on the housing brief. Portia Simpson Miller and the PNP have been vocal in criticising the JLP’s record on affordable housing delivery and NHT management.

The National Housing Trust, as a statutory body, continues its operations independent of the political transition at a technical level. Mortgage applications are being processed; scheme developments are continuing. However, the strategic direction of the Trust — including any adjustments to loan limits, income thresholds, or scheme prioritisation — will await clearer governmental guidance, which in a pre-election environment may not materialise until after the electorate has had its say.

Construction and Development Sector

The construction sector’s October performance was subdued, a pattern consistent with the broader economic climate but amplified by the political transition. Private developers and infrastructure contractors alike operate with longer time horizons than political cycles, and the uncertainty introduced by a snap election call is not sufficient on its own to halt projects already under way. However, new investment decisions are being deferred by developers who would prefer clarity on the post-election policy environment, particularly as it relates to NHT scheme partnerships and planning approvals.

Material costs continue to present a challenge. Imported building materials — which constitute a significant share of the input cost for formal construction — are priced in US dollars at a time when the Jamaican dollar trades in the J$90–96 band. Cement, produced locally by Caribbean Cement Company, provides some relief to cost pressures for lower-specification construction, though demand fluctuations affect pricing through the year.

Major Developments

NHT and HAJ continue to bring units to market in the established development corridors of St. Catherine and the Corporate Area. The pipeline of schemes in various stages of planning and construction represents the most substantial source of new formally-titled supply expected over the next 12 to 24 months. The pace of unit completions has been a persistent point of political contention, with the opposition arguing that the JLP government has underdelivered relative to stated targets.

Inner-city housing improvement continues under UDC-coordinated programmes in Kingston, with incremental progress being made on tenure security and physical upgrading in communities where informal housing predominates. These initiatives are important for the long-term health of Jamaica’s urban housing stock but generate limited new formal supply in the near term.

Infrastructure

Infrastructure investment — particularly in road access and utility connections to proposed development sites — remains a binding constraint on the pace at which new housing schemes can be brought to market at scale. The challenges are fiscal as much as technical: with the government’s primary balance obligations under post-JDX fiscal frameworks limiting discretionary capital expenditure, the pipeline of infrastructure works is proceeding more slowly than the housing delivery targets require.

Investment Climate

The investment climate for Jamaican real estate in the November 2011 context is shaped by two competing forces: the fundamental demand drivers that make the sector a long-term proposition, and the short-term uncertainty created by the political transition and the Eurozone’s deteriorating trajectory. Italian sovereign yields breaching 7 per cent in November have sent a signal that the Eurozone stress is not confined to peripheral small economies but is threatening systemically important members — a development with broader implications for global risk appetite.

Diaspora and Remittances

Diaspora interest in Jamaica’s political transition is keen; many Jamaicans abroad maintain strong connections to family, property, and community at home. The election cycle typically generates heightened diaspora engagement with Jamaican affairs, and housing — both as a personal aspiration and as an investment category — features prominently in diaspora household financial planning. Remittance volumes remain a key metric to watch as the holiday season approaches, when flows traditionally increase as diaspora families support household expenses and celebrations.

Affordability

The election campaign, now effectively under way, is already generating housing-related pledges from both major parties. The JLP under Holness is expected to emphasise homeownership expansion and NHT accessibility. The PNP under Portia Simpson Miller has consistently positioned the Trust as an institution that should be more aggressively deployed in service of lower-income Jamaicans. For prospective homebuyers, the political competition may translate into near-term announcements of expanded NHT loan limits or new scheme releases — a pattern observed in previous election cycles.

Regional Context

The Caribbean region is watching Jamaica’s political transition with interest, as the island’s fiscal trajectory and its relationship with multilateral lenders — particularly the IMF — have implications beyond its shores. Jamaica’s government-to-debt ratio remains among the highest in the hemisphere, and the post-election administration, whoever wins, will face the same structural fiscal realities that constrained housing delivery under Golding.

Looking Ahead

All eyes are on the electoral calendar. Holness has the authority to call an election at a time of his choosing within the constitutional framework, and the expectation is that a date will be announced shortly. The housing market is likely to remain in a pre-election holding pattern through November and into December, with activity picking up materially once the electoral outcome is known and the incoming government’s housing and NHT agenda becomes clearer. The fundamental demand for affordable housing is unchanged; what the market awaits is the policy framework within which that demand can be more effectively channelled.