Election Eve: Housing Promises From Both Parties Define Jamaica’s 2016 Campaign — February 2016

Publication Date: 3 February 2016 | Coverage Period: 3 January–2 February 2016 | Category: Monthly Review

January in Brief

• General election confirmed for 25 February 2016; both PNP and JLP intensify campaign activity with housing affordability taking centre stage.
• JLP leader Andrew Holness launches “Project Housing” platform, pledging to provide 10,000 homes to first-time buyers and accelerate private sector housing delivery.
• PNP government defends its NHT record, pointing to the November 2015 loan ceiling increase and new joint-venture housing completions as evidence of housing progress.
• Bank of Jamaica holds monetary policy rate steady; commercial mortgage rates near 9.5%, with gradual downward trend expected as oil prices remain depressed.
• Brent crude oil falls below US$30 per barrel at January trough — a welcome development for Jamaica’s energy-import-dependent economy.
• Jamaican dollar trades near J$123–124 per US dollar; exchange rate stability underpins construction sector confidence.

Housing Market Conditions

Jamaica’s property market entered 2016 under the shadow of an impending general election, with the announcement of a 25 February polling date creating the temporary pause in transaction activity that typically precedes major political transitions. Buyers and developers alike are proceeding with caution: not from pessimism about the market’s fundamentals, which remain broadly supportive, but from the rational desire to assess the policy direction of the incoming government before committing to significant investments.

Despite the pre-election softening in sentiment, underlying demand signals remain positive. NHT contributor enquiries are running at elevated levels following the November 2015 loan ceiling increase, and estate agents in Kingston, St. Andrew and St. Catherine report that viewings have continued through January, even if contract signings have moderated. The north-coast market — less sensitive to domestic political cycles given its reliance on diaspora and international buyers — has experienced little disruption.

The Election and Housing Policy: A Defining Battle

Housing has emerged as the pivotal battleground of Jamaica’s 2016 general election campaign. The convergence of a 100,000-unit-plus housing deficit, an aspirational young electorate and years of unmet promises from both major parties has elevated the issue to the front rank of voter concerns alongside crime, jobs and the cost of living.

The Jamaica Labour Party’s “Project Housing” initiative, unveiled by Andrew Holness in recent weeks, centres on a commitment to deliver 10,000 homes to first-time buyers, backed by a reformed and more commercially oriented NHT that would partner extensively with the private sector. Holness has argued that the PNP government’s approach has been too bureaucratic and too slow, and that a JLP administration would unlock private sector capacity to accelerate delivery at scale. The JLP’s platform also emphasises reducing the cost of housing inputs — including stamp duty reform and streamlined planning approvals — to improve affordability without relying solely on expanded subsidy.

The PNP government, led by Prime Minister Portia Simpson Miller, has mounted a vigorous defence of its housing record. The party points to the NHT’s J$5.5 million loan ceiling increase — effective since November 2015 — to accelerating HAJ and NHT joint-venture completions and to the broader macroeconomic stabilisation that has made mortgage financing more accessible. PNP strategists argue that the JLP’s housing promises are unfunded and that continuity of the IMF programme and fiscal stability are preconditions for any sustained improvement in housing affordability.

Independent housing analysts note that both parties are making commitments that will be fiscally challenging to fulfil at the pace promised. The NHT’s capacity is constrained by contributor flows, land availability and the pipeline of construction-ready projects. Bridging the 100,000-unit deficit over any realistic timeframe will require not just policy intent but sustained public and private investment, regulatory reform and a willingness to densify urban land use — a politically sensitive proposition in a society where single-family housing on owned land remains the dominant cultural aspiration.

Construction and Development

Construction activity in January was brisk on active sites but subdued in terms of new project launches, as developers await the electoral outcome before committing to new capital expenditure. Existing NHT schemes and HAJ programmes proceeded on schedule. Private developers with committed equity and planning approvals continued working, particularly on mid-market apartment projects in New Kingston, Barbican and Kingston 8, and on affordable-housing schemes in St. Catherine.

Building material costs — a persistent pressure given the import content of Jamaican construction — benefited modestly from continued low oil prices, which compress transport and energy inputs. Cement and steel prices, which track global commodity markets, remained manageable. Contractors report that project economics for NHT-linked schemes at the expanded J$5.5 million loan ceiling are now workable for units priced between J$7 and J$9 million, a price bracket achievable for basic but well-specified housing in peri-urban locations.

Monetary Conditions and Mortgage Market

The Bank of Jamaica maintained its accommodative policy stance through January, with the overnight deposit rate held near zero as inflation continued to track well below the 5.5–7.5% target band. The BOJ’s December 2015 quarterly monetary policy report confirmed that economic growth for the December 2015 quarter appeared positive, consistent with a fourth consecutive quarter of expansion. Commercial mortgage rates are averaging approximately 9.5%, with building societies at the lower end of the range.

The February 2016 average interest rate for mortgage loans in Jamaica stands at approximately 9.62%, according to Bank of Jamaica data. While this remains high by international standards, the trend is downward, and the combination of fiscal stabilisation, low inflation and BOJ accommodation is expected to gradually feed through into lower lending rates over the course of 2016 and beyond.

Infrastructure and Major Developments

The Southern Coastal Highway Improvement Project and related road infrastructure investments continue to enhance the attractiveness of southern Jamaica for residential development. Improved road access to communities in Clarendon and St. Catherine is gradually widening the commuter belt for Kingston workers, opening new land corridors for housing development at lower price points than are achievable within the Kingston Metropolitan Area itself.

The continued development of Montego Bay’s commercial and residential infrastructure — the second-largest urban centre — is also drawing investor attention. St. James parish has seen growing interest from private developers targeting the upper-middle market, supported by the north-coast tourism economy and the resident expatriate community.

Diaspora and International Investment

Diaspora investors are monitoring the election closely. The JLP’s business-friendly reputation and its emphasis on private sector partnership in housing delivery have resonated with sections of the North American and UK diaspora who have traditionally preferred the certainty of JLP economic management. However, the PNP’s long incumbency — in government since 2012 — and its stewardship of the IMF programme have also earned respect among financially sophisticated diaspora buyers who prioritise macroeconomic stability.

UK-based Jamaican investors are navigating their own domestic political uncertainty. The EU referendum debate in the United Kingdom is intensifying, with Prime Minister Cameron’s renegotiation of UK membership terms ongoing. Any UK-EU uncertainty that weakens sterling or disrupts the UK economy could affect the purchasing power and confidence of UK diaspora buyers of Jamaican property.

Affordability

Affordability remains the central challenge for Jamaica’s housing sector regardless of which party prevails on February 25. The structural mismatch between wage growth and house price inflation — compounded by import-cost pressures on building materials and the limited availability of long-term, fixed-rate mortgage finance — means that a large proportion of the working population remains unable to access formal homeownership without substantial NHT or other subsidy support.

The incoming government, whichever it may be, will face the same constraints: a housing deficit in excess of 100,000 units, an NHT whose contributor base is finite, and a private sector that requires commercially viable land and construction cost structures to justify investment. Meaningful progress will require sustained commitment across multiple electoral cycles, not merely the term of a single administration.

Looking Ahead

The next edition of this review will be published on 3 March 2016 — shortly after the February 25 election result is known. The outcome will determine the direction of housing policy for the next five years and will significantly influence the property market’s recovery trajectory. Both major parties have made housing a centrepiece of their platforms, and Jamaica’s property sector — buyers, developers, financiers and diaspora investors alike — will be watching the result closely. The fundamentals of the market are sound; what remains to be determined is the speed and ambition of the policy response that follows.

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