Hurricane Michael Spares Jamaica as Market Extends Its Run — Monthly Housing Review, October 2018

Publication Date: 3 October 2018 | Coverage Period: 3 September – 2 October 2018 | Category: Monthly Review

September in Brief

• Hurricane season reaches statistical peak; Jamaica on heightened alert throughout September
• Hurricane Michael develops; tracking toward Florida Panhandle; Jamaica monitoring closely
• Autumn transaction market performing strongly; Kingston and north coast active
• NHT scheme handovers progressing in St Catherine and St James
• HAJ land-titling continues in Trelawny; rural homeownership security improving
• Fed raises rates again in September; global emerging market pressure sustained

Housing Market

Jamaica’s residential property market has demonstrated characteristic autumn strength through the September period, with the transaction pipeline that built through the summer diaspora visiting season now converting into a meaningful volume of completions and new purchase agreements. The market is performing at or above prior-year levels across the key segments, and the absence of hurricane damage — despite a season that has generated significant concern — has preserved the economic confidence that underpins buyer activity.

In the Kingston Metropolitan Area, sellers have maintained pricing discipline and buyers have remained active. The upper-middle segment of the Kingston market — properties in Cherry Gardens, Norbrook, Barbican, and the better-connected reaches of St Andrew — has seen sustained demand from both local buyers and returning diaspora. The lower-middle segment, where NHT financing is the critical enabler, has also been active, with NHT application and approval numbers tracking in line with programme targets.

The gated community market in Portmore and St Catherine has been one of the standout performers of the year to date, with several schemes either completing or advancing to handover stage. Greater Portmore’s combination of relative affordability, improving infrastructure connectivity, and security-conscious development design has made it one of the most consistently in-demand residential markets in the island, and developers show no signs of pulling back from the pipeline of schemes in planning and early construction.

Hurricane Michael: Jamaica on Watch

The defining weather story of the early October period is Hurricane Michael, which has developed into a powerful system in the western Caribbean and Gulf of Mexico. Early tracking models have placed Jamaica on the southern fringe of the projected path envelopes, and the island’s meteorological service and ODPEM have been maintaining close watch. As the storm’s track has become clearer, its trajectory toward the Florida Panhandle has emerged as the most likely outcome, sparing Jamaica from direct impact.

The relief is significant. A direct hit from a major hurricane at this stage of Jamaica’s economic recovery would have set back construction timelines, damaged housing stock that disproportionately affects lower-income communities in areas with older or informal building stock, and potentially disrupted the tourism season that begins its recovery from summer toward winter high season in October and November. The Florida Panhandle’s misfortune is a reminder — stark and immediate — of the vulnerability that defines Caribbean living and property ownership.

For the insurance market, Michael’s track toward Florida will generate claims that could tighten global reinsurance capacity and potentially pressure Caribbean property insurance premiums at renewal. This is a dynamic that the local market will monitor over the coming months, particularly for the north coast vacation property segment where comprehensive hurricane coverage is a critical component of the investment proposition.

Government Policy: NHT Handovers and Delivery

The NHT has been progressing its second-quarter delivery schedule, with handovers of completed units in St Catherine schemes advancing and new phases in St James approaching completion. The Trust’s public communications have emphasised delivery execution — the conversion of the planned unit pipeline into actual keys-in-hand homeownership — as the primary institutional priority for this phase of the fiscal year.

The HAJ’s land-titling programme has continued its steady progress, with Trelawny reporting the issuance of new batches of titles to long-established communities. This work carries limited immediate market impact but is significant for the long-term formalisation of Jamaica’s housing stock and the ability of landholding households to access credit and engage with the formal property market.

The NHT loan ceiling question remains unresolved. Industry participants and housing advocates had anticipated some form of signal by mid-year, but the fiscal year has progressed without announcement. There is now a growing expectation that any loan limit revision will be tied to the March 2019 budget season, when the government will have a natural platform for housing-related policy announcements. The gap between the J$5.5 million ceiling and the actual cost of delivering a quality two-bedroom unit in the Kingston or Montego Bay markets has continued to widen through the year, and pressure for a revision is unlikely to abate.

Construction Sector

Jamaica’s construction sector has been at elevated output levels through September, driven by the combination of residential scheme delivery, ongoing hotel and resort construction, and public infrastructure investment. The materials cost environment has been marginally more benign than the sharp escalation phase seen through mid-year, with oil prices moderating slightly from their peaks and steel markets showing some stabilisation.

Labour availability in the skilled trades continues to be the binding constraint for many residential developers, with hotel and resort construction projects — which offer premium wages and more predictable working conditions — drawing the most experienced tradespeople. The HEART/NSTA training pipeline is producing graduates, but the lag between training commencement and productive deployment means the skilled trades shortage is a structural issue that will persist for at least several more years.

Investment and Diaspora

The autumn period has seen a continuation of the diaspora buyer activity that peaked through the summer. The US and Canadian buyer segments have been the most active, with buyers in the retirement-planning age cohort (40 to 60 years old) representing the bulk of diaspora transaction volume. JN Bank, VM Group, and NCB Financial Group have all reported continued product uptake on their diaspora mortgage facilities.

The UK-based market has shown signs of gradual normalisation post-Windrush, with some buyers who had paused decision-making through the spring and early summer returning to the market. The UK government’s commitment to a compensation scheme and the high-profile parliamentary attention given to the Windrush cases appear to have provided sufficient reassurance for a portion of UK diaspora buyers to recommit to Jamaica property plans.

North Coast Market

The north coast is preparing for the winter high season, which traditionally runs from November through April and represents the peak of visitor arrivals and short-let vacation rental occupancy. Investors with properties on the Airbnb and HomeAway platforms have been preparing listings, investing in furnishings and amenities upgrades, and managing the September shoulder season with competitive pricing. The outlook for the winter 2018/2019 season is positive, with advance bookings running strongly.

Macroeconomic Update

Jamaica’s macroeconomic performance has remained strong through the September period. The IMF’s ongoing engagement under the Extended Fund Facility has been positive, with the programme on track and Jamaica continuing to be cited as a regional model of fiscal adjustment. GDP growth for 2018 is expected to come in at approximately 1.5 to 2 percent — modest by global standards but a meaningful achievement given the structural constraints Jamaica has been working through. The Bank of Jamaica’s foreign exchange reserves have built to comfortable levels, providing a buffer against the kind of sharp external shock that has affected more vulnerable emerging market economies in 2018.

Looking Ahead

The November issue of this review will cover the final weeks of hurricane season and the market’s transition into the year-end and winter season. The property market is expected to maintain its autumn momentum through October and November, with the year-end period historically producing a concentration of transaction completions as buyers seek to finalise purchases before the new year. The north coast winter season presents a natural catalyst for market activity, and the NHT’s scheme delivery programme should produce further handover news. The unresolved loan ceiling question will be a continuing backdrop to the affordability story.