Publication Date: 3 December 2017 | Coverage Period: 3 November – 2 December 2017 | Category: Monthly Review
November in Brief
- Jamaica’s property market closes November in positive territory; year-end transaction activity in line with expectations.
- NHT loan approvals for the financial year tracking ahead of the prior year’s pace; joint venture units near handover.
- Bank of Jamaica holds policy rate at 3.50%; commercial mortgage rates stable in the 8–9% range.
- Caribbean reconstruction financing begins to take shape; IDB and World Bank engage Dominica and Puerto Rico.
- Jamaica unemployment rate at an 11-year low; improving labour market underpins residential demand.
- Planning department activity in St James and St Catherine reflects continued developer confidence.
Housing Market Conditions
Jamaica’s residential property market enters December 2017 in a condition of quiet confidence. The extraordinary events of the hurricane season — which threatened the island in September and devastated its Caribbean neighbours — are receding from the immediate foreground of market activity, though they have left a permanent mark on public discourse about housing resilience and insurance. The fundamental drivers of the market — low interest rates, an improving economy, active NHT programmes and a persistent housing deficit — remain intact and are supporting transaction volumes and price appreciation consistent with recent years.
In the Kingston metropolitan area, end-of-year incentives from some developers have accelerated sales in new apartment schemes. The market for two-bedroom apartments in established Liguanea Plain and Half Way Tree developments has been particularly active, with first-time buyers — many of them accessing NHT mortgages — representing a significant share of closings. In the villa and luxury segment, a smaller but consistent cohort of diaspora and returning-resident buyers has maintained activity in Norbrook, Stony Hill and the heights above Kingston.
The Montego Bay residential market reflects the continued strength of the tourism economy in St James. Hotel and resort expansion in the strip between Ironshore and Rose Hall has generated sustained demand for staff accommodation and workforce housing, a segment that private developers and the NHT are both attempting to address. Rents in mid-range units close to Montego Bay’s commercial district have risen appreciably over the past two years, signalling a structural undersupply in the sub-J$80,000 monthly rental band.
Government Policy and the NHT
The National Housing Trust’s performance for the financial year to date reflects solid execution of its development and mortgage programmes. Joint venture units in St Catherine and Trelawny are approaching the handover stage, with NHT contributors having been pre-qualified for mortgages on these units. The Trust’s Board has maintained its commitment to the joint venture model as the most capital-efficient way to expand supply while controlling risk.
Discussions within government about the adequacy of the NHT’s mandate in light of the Caribbean’s hurricane season have not yet produced specific policy proposals. Housing ministry officials have indicated that the post-hurricane review process is ongoing and that recommendations on building standards, enforcement and emergency preparedness will be brought forward in the new year. The NHT itself is expected to table its annual report covering the 2016/17 financial year in the coming weeks, providing a detailed accounting of its lending and development activities.
Construction Sector
The construction sector is enjoying a productive end to what has been a reasonably strong year. Residential completions are tracking ahead of the prior year, boosted by the joint venture pipeline and by private sector apartment projects coming to market in Kingston and Montego Bay. Hotel construction and refurbishment in the tourism belt — a sector that competes directly with residential construction for skilled labour and materials — remains intense, keeping upward pressure on both labour costs and the prices of key construction materials.
The professional bodies representing architects, engineers and quantity surveyors have continued their post-hurricane advocacy for stronger building standard enforcement, and there is growing discussion of whether the government should establish a dedicated building safety enforcement unit with island-wide jurisdiction, rather than relying on under-resourced parish councils. No government announcement has yet been made on this proposal.
Investment and Finance
The Bank of Jamaica held its policy rate at 3.50 per cent through November, consistent with the inflation outlook and the BOJ’s inflation-targeting framework. Commercial mortgage rates at the major banks continue to range from approximately 8 to 9 per cent annually, against which the NHT’s zero-to-5-per-cent range represents a compelling advantage for eligible contributors. The exchange rate has continued to move gradually, with the Jamaican dollar trading in the J$130–133 range against the US dollar.
The Jamaica Stock Exchange’s broader rally — which has made the JSE one of the best-performing equity markets in the world on a multi-year basis — has generated a wealth effect among middle-class and upper-middle-class Jamaicans that is feeding into some property market activity. Investors who have seen strong returns on JSE holdings are in some cases recycling gains into residential property, adding to demand at the upper end of the market.
Major Developments
November saw continued planning application activity for new residential developments in St Catherine, St Andrew and St James. The Portmore municipality continues to attract developer attention given its large population, improving highway access and relative land availability compared with the congested Corporate Area. Developers are examining sites in Greater Portmore and Waterford for mid-density apartment schemes targeting the NHT contributor market. In St Andrew, infill development on smaller lots in established communities continues as developers respond to the scarcity of large land parcels close to Kingston’s employment centres.
Infrastructure
Road works supporting housing catchment expansion continued through November. The upgrading of roads connecting outlying residential communities to Highway 2000 access points is a consistent theme of the current government’s infrastructure spending. Improved road quality and journey times are a material factor in the property values of communities within commuting distance of Kingston and Montego Bay, and developers pay close attention to infrastructure investment as a signal of future residential viability.
Diaspora
Remittance flows have held up well through the November period, with the United States and Canada continuing to be the dominant source markets. The Bank of Jamaica’s data on remittance inflows for 2017 will be reported in the new year, but advance indications from financial transfer operators suggest another strong year. For the residential property market, particularly in parishes like Manchester, Portland and St Ann, diaspora remittances remain a structural pillar of demand — supporting both self-build construction projects and the purchase of family homes.
Affordability
The fundamental affordability challenge has not changed through November. The average price of a new residential unit in formal development schemes exceeds J$15 million, a level attainable for NHT contributors with access to the Trust’s subsidised rates but challenging for those reliant on commercial financing. The government’s broader economic programme — low inflation, improving employment and wage growth in the formal sector — is gradually improving the financial capacity of the population to service mortgages, but the pace of improvement remains slower than the pace of price appreciation in desirable residential areas.
Regional Context
The Caribbean reconstruction narrative is evolving from immediate humanitarian response to the longer business of financing and executing rebuilding programmes. The Inter-American Development Bank and World Bank have both announced initial financing for Dominica and Puerto Rico. Barbuda’s reconstruction presents distinctive challenges given the scale of destruction and the complexities of land tenure on the island. For the broader Caribbean property market, the long-run implications of the 2017 hurricane season for insurance costs, development standards and investor risk perception are still being absorbed.
Looking Ahead
As Jamaica prepares to close out 2017, the housing sector’s mood is one of tempered optimism. A year that included the island’s closest brush with a Category 5 hurricane in living memory ends with the market intact, the NHT pipeline advancing and the economic fundamentals supportive. The priorities for 2018 are clear: sustained action on the housing deficit, meaningful enforcement of the Building Act, and a national conversation about disaster risk and resilience that translates into tangible policy change. The events of September 2017 have ensured that conversation cannot be indefinitely postponed.
This review covers the period 3 November to 2 December 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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