Publication Date: 3 June 2018 | Coverage Period: 3 May – 2 June 2018 | Category: Monthly Review
May in Brief
- Windrush scandal dominates Caribbean community news; UK diaspora buyer confidence shaken
- NHT housing delivery programme on track for first quarter of new fiscal year
- Global oil prices approaching US$80 per barrel; shipping and transport costs rising
- Summer tourism season begins strongly on Jamaica’s north coast
- Kingston apartment completions adding to supply; prices holding firm
- Bank of Jamaica signals continued accommodative monetary stance
Housing Market
Jamaica’s residential property market entered its summer phase in a broadly positive state, with transaction activity holding at healthy levels across Kingston, the south coast suburban belt, and the north coast tourist corridors. Demand remains fundamentally sound, underpinned by the structural housing deficit, improving employment conditions linked to the island’s macroeconomic recovery, and the continued weight of diaspora interest. The primary constraint on market growth remains the supply side: insufficient new units are coming to market fast enough to satisfy latent demand, and construction timelines continue to be stretched by approval delays and intermittent materials cost pressures.
In the Kingston metropolitan area, the emerging condominium and purpose-built apartment segment has been adding modest new supply, particularly in the New Kingston and Half-Way-Tree corridors favoured by young professionals. These units are generally priced above the NHT individual loan ceiling of J$5.5 million but accessible to joint applicants or buyers with top-up commercial financing. The rental market for this stock is tight, with occupancy rates among completed developments running at high levels.
The Windrush Effect on Diaspora Buyers
The defining external story for Jamaica’s property market in May 2018 has been the continuing fallout from the Windrush scandal. What began as a slow-burning investigative news story earlier in the year broke into full public consciousness in April and May, as the scale of the UK Home Office’s mistreatment of long-settled Caribbean Commonwealth citizens became undeniable. Jamaicans who had lived and worked in Britain for decades — many since the 1950s and 1960s — were found to have been wrongly classified as illegal immigrants, denied access to healthcare and banking, detained, and in some cases deported.
The emotional and practical reverberations for Jamaica’s UK-based diaspora community have been significant. Estate agents and mortgage brokers in Jamaica who serve the overseas buyer market report a perceptible shift in sentiment among UK-based enquirers. Some prospective buyers are accelerating plans to purchase in Jamaica, interpreting the scandal as evidence that their long-term future in Britain is less secure than previously assumed and that ownership of a Jamaican home — a bricks-and-mortar anchor to their country of birth — is more urgent than before.
Others have pulled back, finding their financial circumstances disrupted. Reports of Windrush-generation Jamaicans losing employment, bank accounts, and access to credit as a consequence of being wrongly deemed without legal status are circulating widely within the diaspora community, and the knock-on effects on disposable income and savings available for property purchase are real. For this group, the aspiration to buy in Jamaica has not dimmed, but the immediate capacity to act has been impaired.
JN Bank, which has historically served as the most dedicated financial institution for UK-based Jamaican buyers, has reported heightened interest in diaspora mortgage products, alongside an increase in inquiries from buyers seeking guidance on dual-citizen rights and property ownership structures. The scandal is likely to have a longer-term impact on the UK diaspora’s relationship with Jamaica as a property destination, though the net directional effect — whether it accelerates or inhibits purchases in aggregate — will only become clear over subsequent months.
Government Policy
The Housing Ministry and NHT have maintained their programme delivery focus through May, with the first quarter of the 2018/2019 fiscal year tracking broadly in line with targets. HAJ’s land-titling work in St Catherine and Trelawny has progressed, with new batches of titles being issued to longstanding occupants of government-held land. This programme, while not generating headline transaction volumes, has significant long-term implications for household wealth and the ability of rural communities to access formal credit.
The NHT’s Guaranteed Purchase Programme — under which the Trust commits to purchase unsold units from approved developers, reducing developer risk and incentivising construction — has been active in the period, with several scheme completions progressing toward handover. The programme remains a key mechanism for stimulating private sector housing production and is regarded by industry participants as one of the NHT’s most effective tools for expanding supply.
Construction Sector
Construction cost pressures have continued to intensify through May, driven by a combination of domestic labour market dynamics and global commodity price trends. Brent crude oil, which ended 2017 at approximately US$60 per barrel, has advanced toward the US$78 to US$80 range by late May 2018 — a rise of approximately 30 percent year-on-year. The impact on Jamaica’s construction sector flows through multiple channels: transportation costs for materials, fuel for plant and equipment, and the underlying cost of petroleum-derivative products such as PVC piping and insulation.
Steel prices have also risen in response to global demand conditions and the uncertainty created by US tariff measures. Developers and contractors managing projects with fixed price contracts are absorbing these cost increases, while those with more flexible arrangements are passing some portion of the increase to buyers. The net effect is upward pressure on construction costs that is gradually widening the gap between NHT loan limits and actual build costs — particularly for the mid-to-upper segment of the affordable housing market.
North Coast and Tourism-Linked Market
The summer tourism season has opened with strong visitor numbers on Jamaica’s north coast, and the residential market in Montego Bay, Ocho Rios, and Negril has been buoyed accordingly. Investor-buyers looking to generate Airbnb and vacation rental income are active, particularly in Negril and the St Elizabeth south coast, where price points are lower and short-let rental yields are attractive relative to the investment required.
Hotel and resort construction along the north coast corridor remains at elevated levels, with several major hospitality projects in progress. The competition for skilled construction labour between the hotel sector and residential developers is a recurring challenge, with hotel projects typically able to offer wage premiums that draw workers away from smaller residential sites.
Affordability
The structural affordability challenge in Jamaica’s housing market has shown no signs of easing. Rising construction costs, a static NHT loan ceiling, and commercial mortgage rates that remain high relative to the underlying Bank of Jamaica policy rate all conspire to keep homeownership aspirations unfulfilled for a significant portion of Jamaica’s working population. The self-build route — incremental construction financed through savings, NHT materials loans, and informal credit — remains the dominant path for lower-income households, but it is slow and leaves families in substandard housing conditions for extended periods.
Looking Ahead
The Windrush scandal will remain in focus through the June and July period as the UK government works to establish a compensation scheme and the full scope of those affected becomes clearer. For Jamaica’s property market, the net impact on UK diaspora buyer activity will be closely watched. The summer season is expected to sustain north coast market momentum, and the Kingston apartment market should continue to attract developers and buyers. The construction cost trajectory remains the key variable of concern for housing supply economics, and any further oil or steel price increases will put additional strain on an already challenged affordability picture.
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