The Morning After: What Jamaica’s Change of Government Means for the Housing Market

Jamaica Homes Housing Affordability & Cost of Living Review — April 2016

• Andrew Holness and the Jamaica Labour Party won the February 25 general election, ending four years of PNP government under Portia Simpson Miller
• The new government inherits both the IMF Extended Fund Facility and a housing deficit that four years of austerity have left structurally unchanged
• Investor and business confidence improved measurably in the weeks following the election result, with Jamaica’s financial markets responding positively
• The JLP’s housing commitments — expanded NHT activity, faster land regularisation and a focus on growth — now face the test of delivery against constrained fiscal resources
• Bank of Jamaica maintains its rate-holding posture as the new government establishes its fiscal and monetary approach in consultation with the IMF
• The housing deficit remains the island’s most urgent and politically sensitive social challenge: unchanged by the election, it now becomes the JLP’s defining domestic test

Six weeks have passed since Andrew Holness stood before his supporters at Half Way Tree and accepted the mandate that Jamaica’s electorate, by a margin of thirty-two to thirty-one seats in the House of Representatives, had given him. The Jamaica Labour Party’s February 25 victory was narrow — one of the most competitive general elections in Jamaica’s post-independence history — and its implications for the economy and the housing market are already being assessed and debated across the island. In property offices, at NHT branches, in bank boardrooms and in the communities where housing pressure is most acutely felt, the question being asked is the same: will this matter?

The honest answer, in April 2016, is: possibly yes, but not quickly, and not without the sustained policy commitment that Jamaica’s housing challenge has historically struggled to command from any government for long. The JLP’s economic platform — focused on growth acceleration, private sector investment and moving beyond the austerity logic of the IMF adjustment years — is directionally right for a housing market whose primary supply-side constraint is the difficulty of making formal construction economics work at affordable price points. But government mandates take time to produce housing outcomes; the construction pipeline, the titling system, the NHT’s development capacity are all measured in years, not weeks. The election has changed who is responsible. Whether it changes what happens will take considerably longer to determine.

The PNP’s Housing Legacy

To understand what the JLP inherits, it is necessary to be honest about what the PNP government under Portia Simpson Miller delivered on housing between January 2012 and February 2016. The record is mixed. The PNP managed the most severe fiscal adjustment in Jamaica’s history, navigating the NDX debt restructuring in early 2013 and then the IMF Extended Fund Facility signed in May of the same year. These were genuinely difficult achievements that required political courage and created real economic pain. They also required the compression of capital spending — including public housing investment — that left the NHT’s development programme less ambitious than it might otherwise have been.

The PNP government did maintain the NHT’s operational function. It did not abandon the land regularisation programme, though progress was slow. It did not seek to fundamentally restructure the housing finance architecture. What it did not do — could not do, given the fiscal constraints of the adjustment period — was make the kind of supply-side investment that would meaningfully narrow the housing deficit. Four years of austerity left Jamaica’s housing challenge essentially where it was when the PNP took office: large, structural and inadequately addressed by any formal government programme.

What Holness Has Promised

The JLP’s 2016 election platform on housing was specific enough to be measurable. The party committed to accelerating land regularisation and titling, with a view to bringing tens of thousands of informal landholders into the formal property system. It committed to expanding NHT activity, including raising contribution thresholds and loan limits to reflect the inflation that has eroded the real value of both since they were last revised. It committed to a growth agenda that, by creating employment and raising incomes, would expand the pool of households who can service formal mortgages. And it committed — rhetorically, if not yet in specific programme terms — to making homeownership achievable for ordinary working Jamaicans rather than a privilege of the professional class.

These are the right commitments. The challenge is delivery. Jamaica’s housing deficit has been the subject of political commitment by every government since independence; it has persisted through Manley and Seaga, through Patterson and Golding and Simpson Miller, because the structural barriers to affordable formal housing — land cost, construction cost, titling complexity, mortgage finance economics — are not resolved by commitment alone. They require sustained, funded, well-administered programme delivery over timelines that exceed election cycles. The JLP’s window is approximately five years. It is enough time to change the trajectory; it is not enough time to close a deficit that has been accumulating for decades.

The Market’s First Response

Financial markets responded positively to the JLP’s election victory. Jamaica’s bond spreads tightened in the weeks following February 25. The Jamaica Stock Exchange moved upward. Business confidence surveys, conducted in the immediate post-election period, showed a significant improvement in private sector sentiment that had been subdued under the later years of the PNP’s tenure. This confidence effect is real and is not trivial for housing: investor confidence translates into developer willingness to take on new projects, into bank willingness to lend for construction, and into household willingness to commit to long-duration financial obligations.

What This Means

For buyers, the April 2016 market is one of cautious, improving confidence. The IMF programme’s structural constraints remain in place; rates will not collapse overnight. But the direction of travel — toward growth, toward improved business confidence, toward an economic environment that eventually supports lower borrowing costs — is more clearly established than it was six months ago. Buyers who have been waiting for a changed political environment before committing to purchase should note that the changed environment has arrived.

For the government, the housing policy agenda is its most urgent social inheritance. The mandate is new; the expectation is high. The window for bold supply-side action — the political capital, the public goodwill, the institutional appetite for change — is at its maximum in the first year. What is done in 2016 will define the supply pipeline for 2018 and 2019. The moment to move ambitiously is now.

The Outlook: The Weight of a Promise

Andrew Holness made housing a central theme of his election campaign. Jamaica’s communities, exhausted by years of austerity that improved macro statistics while leaving everyday lives largely unchanged, heard that theme and responded to it. The JLP’s narrow majority is, in part, a mandate for the housing agenda that the PNP was unable to deliver. Fulfilling that mandate is not a matter of political will alone; it requires institutional capacity, financial resources and the policy imagination to find new routes to affordable supply where old ones have failed. The morning after the election is the easy part. The years after it are where the housing story will be written.

This review is produced for informational and journalistic purposes only and does not constitute financial, legal or investment advice.

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