Publication Date: 3 November 2017 | Coverage Period: 3 October – 2 November 2017 | Category: Monthly Review
October in Brief
- Jamaica’s property market returns to normal trading as hurricane season threat diminishes in October.
- Caribbean reconstruction effort takes shape; CARICOM coordination on Barbuda and Dominica rebuilds begins.
- BOJ policy rate unchanged at 3.50%; commercial mortgage rates stable; NHT continues to offer strong advantage.
- NHT Q2 financial year results show healthy contributor base; joint venture pipeline proceeding as planned.
- Building code enforcement debate intensifies post-Irma; calls for national retrofit programme gain traction.
- Insurance industry signals premium increases for 2018 citing Caribbean catastrophe losses.
Housing Market Conditions
October brought a welcome return to normality for Jamaica’s residential property market. With the Atlantic hurricane season’s peak months behind it, the island’s transactional market reopened in earnest. The traditional fourth-quarter uptick in sales and new listings — driven partly by the return of the professional diaspora, partly by buyers who delayed decisions during the peak season — is materialising as anticipated, and agents in Kingston and Montego Bay report a rebuilding of inquiry volumes from the late-September lull.
Price trends remain broadly upward across the prime residential segments. In Kingston and St Andrew, established neighbourhoods such as Norbrook, Beverly Hills and Cherry Gardens have seen steady appreciation in the 5–8 per cent annual range, consistent with inflation and the broader improvement in economic confidence. The mid-market — two- and three-bedroom townhouses in gated communities priced between J$20 million and J$45 million — represents the most active segment by transaction volume, driven by young professionals with access to NHT mortgages and the growing stock of new apartment and townhouse development.
The outer parishes are a more complex picture. Portmore, St Catherine, which houses a large proportion of the island’s working class in apartment blocks and semi-detached units, shows strong rental demand but more modest sales activity. The St James and Montego Bay corridor is experiencing continued development pressure from the tourism economy, with hotel workers and hospitality sector employees competing for a limited stock of affordable residential units in and around the resort town.
Government Policy and the NHT
The National Housing Trust reported steady progress on its development pipeline through October. Joint venture schemes with private developers in St Catherine, Trelawny and St James are moving toward completion and handover, and the Trust’s mortgage application processing — which was uninterrupted even during the acute phase of the hurricane emergency in September — continues to generate new loan approvals at a measured pace.
The government’s Ministry of Economic Growth and Job Creation, which oversees housing policy, has been engaged in post-hurricane review exercises aimed at identifying any weaknesses in Jamaica’s emergency housing response capacity. While Jamaica did not require emergency housing interventions this season, the ministry is understood to be examining the lessons of Barbuda and Dominica — where the speed of government response to wholesale housing destruction proved a critical factor — with a view to strengthening Jamaica’s own preparedness protocols.
Construction Sector
The construction sector rebounded quickly after the caution of September. Contractors report that work programmes paused or slowed during the peak hurricane alert period have resumed, and developers are pressing to complete units before the December holiday period when transactional activity typically softens. Building materials suppliers reported robust demand through October.
The post-Irma debate about building standards has given new momentum to discussions within the engineering and architectural professions about the practical implementation of the Building Act of 2017. Several professional bodies have called for a national dialogue on housing resilience, including a systematic review of enforcement capacity at the parish level, improved training for building inspectors, and public education campaigns targeted at self-build homeowners — who represent a significant proportion of new residential construction across rural Jamaica and who typically build without professional supervision.
Insurance Market
Jamaica’s property insurance market is preparing for a challenging renewal season. Reinsurers — the global wholesale insurers whose capital underpins local insurance companies’ capacity to pay claims — are expected to impose significant premium increases when contracts are renewed in January 2018, reflecting the exceptional losses generated by Irma and Maria across the Caribbean. Local insurers have signalled that some of these increases will be passed through to policyholders in higher homeowner insurance premiums from early 2018.
The industry’s concern about low insurance penetration in Jamaica’s residential sector remains acute. Estimates suggest that fewer than half of Jamaica’s residential properties carry buildings insurance. The September experience — where Jamaica’s uninsured neighbours faced devastating out-of-pocket reconstruction costs — has provided the industry with a powerful, real-world argument for improving coverage rates among lower-income homeowners.
Major Developments
New residential developments announced or advancing through the planning process in October include: further apartment complex proposals in the New Kingston and Half Way Tree corridors; additional phases of townhouse development in Portmore and surrounding St Catherine communities; and the continued expansion of the Montego Bay residential market in response to tourism-driven demand. Developers operating in the upper market segment — luxury villas and high-specification apartment towers targeting the professional and diaspora buyer — reported ongoing appetite from buyers whose confidence in the Jamaican economy has grown alongside the island’s improving fiscal fundamentals.
Infrastructure
Infrastructure works supporting residential development continued across several key corridors through October. The Major Infrastructure Development Programme maintained its schedule of road rehabilitation and expansion works. The continued development of the Highway 2000 network — including works on the eastern leg connecting Kingston to the east — is improving the accessibility of residential developments in St Catherine and Clarendon parishes and expanding the effective commuter zone for Kingston-based workers.
Diaspora
The diaspora connection remained central to residential demand through October. The UK’s post-Brexit referendum economic uncertainty has dampened the spending power of the large Jamaican community in Britain relative to pre-2016 levels, as the pound’s depreciation against the US dollar and the Jamaican dollar has reduced the purchasing power of UK-based remittances. North American diaspora buyers, however, remained active, particularly in the Mandeville and St Elizabeth markets where retirement and vacation property investment is concentrated.
Regional Context: Caribbean Rebuilds
The Caribbean reconstruction challenge is taking clearer shape as October closes. Barbuda remains largely uninhabited, with the Antiguan and Barbudan government working to develop a reconstruction plan that involves significant international assistance. Dominica has launched an emergency appeal and is engaging multilateral development banks for reconstruction financing. Puerto Rico’s recovery is proceeding slowly amid the scale of the damage and logistical challenges; electricity restoration alone is expected to take many months.
Jamaica is monitoring the reconstruction effort with both humanitarian concern and professional interest. Jamaican construction companies with regional capabilities may find opportunities in the reconstruction work; Jamaican building professionals with expertise in hurricane-resistant construction have skills that are in acute demand across the eastern Caribbean.
Affordability
Affordability pressures show no sign of easing. Construction costs — driven by the cost of imported steel, cement additives and finishing materials, all priced in US dollars — continue to push the floor price of new residential units above the reach of median-income Jamaicans without subsidised financing. The NHT’s intervention is essential in bridging this gap, but the Trust’s capacity to serve the full range of unmet demand is constrained by the size of the formal contributing base and the fiscal pressures governing the government’s ability to recapitalise or expand the agency’s mandate.
Looking Ahead
The final two months of 2017 offer Jamaica’s housing sector a window to consolidate the progress of recent years. With Irma and Maria safely in the past, with the economy growing and interest rates low, and with an active development pipeline moving toward completion, the outlook is constructive. The longer-term agenda — meaningful acceleration of affordable supply, genuine enforcement of the new Building Act, expansion of insurance penetration — requires sustained political will. The events of the past six weeks have provided that agenda with unprecedented public salience.
This review covers the period 3 October to 2 November 2017. Market data, interest rates and development information are drawn from publicly available sources current as of the date of publication.
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