Majority Secured: Portland Eastern Gives Holness Room to Govern, Market Gives Buyers Reason to Commit

NHT Modernises; Processing Times Improve

The National Housing Trust’s introduction of a digital application platform in the third quarter was a smaller but symbolically significant development. The Trust’s administrative processes had, for much of its history, been characterised by the paper-based workflows that created processing backlogs in high-demand periods and generated the friction that had historically made NHT lending slower than the market’s pace. The digital platform, which allowed contributors to submit applications, upload documents, and track approval status electronically, reduced processing times materially for a cohort of applicants who could navigate digital channels. The improvement was most significant during peak demand periods — precisely the times when the Trust’s capacity had historically been most stretched.

What This Means

The third quarter of 2019 closes Jamaica’s penultimate pre-COVID quarter in the best shape that many analysts have assessed the market to be in since the expansion began. Political uncertainty has diminished. Tourism is at record levels. Interest rates remain accommodative. The NHT is modernising. And the fundamental supply-demand balance — with population growth, urbanisation, and BPO employment creating sustained demand against a supply pipeline that, while larger than at any point in the expansion, has not yet fully closed the deficit accumulated in the 2008–2014 years — continues to underpin price appreciation at rates consistent with sustained rather than bubble-driven expansion.

The fourth quarter will close the year and set the baseline for what 2020 will bring. The calendar is approaching the constitutional deadline for the next general election, and the government will need to call it before the end of 2020. The market is watching the timing with the same attention it brought to 2016’s election. This time, however, it is watching from a position of strength that did not exist in 2016 — and with a political uncertainty premium that is notably smaller than it was then.

jamaica-homes.com | Market Analysis | Q3 2019

The Portland Eastern by-election of July 2019 returned an additional JLP seat, expanding Holness’s majority to two. The market, which had been carrying a measure of political anxiety since 2016, responded to the reduced constitutional uncertainty with a notable Q3 volume uplift.

• Portland Eastern by-election July 2019; JLP wins, parliamentary majority expands to 33–30
• Reduced political uncertainty drives Q3 transaction uplift; attorneys report busiest September in years
• Hurricane Dorian passes well north and east; Jamaica largely spared
• Tourism on track for another record year; visitor spending at all-time high
• Residential prices appreciate four to six percent in Q3; pace consistent with income growth
• NHT introduces digital application platform; processing times improve materially

The by-election in Portland Eastern on July 2, 2019 was, in the scheme of Jamaica’s political history, a minor event — a contest for a single parliamentary seat in one of the country’s smaller and more rural constituencies. Its consequences, however, were not minor for the property market. The Holness government had been governing since February 2016 with a majority of exactly one seat, a condition that created a constitutional fragility so acute that a single defection, illness, or by-election loss could have ended the government’s life at any point in the preceding three years. The Portland Eastern result, which returned Easton Douglas for the JLP and expanded the government’s majority to thirty-three seats to thirty for the PNP, did not transform the political landscape. But it reduced the most acute form of constitutional uncertainty that had hung over Jamaica’s investment environment since the 2016 election.

Attorneys who process the conveyancing pipelines that translate buyer decisions into completed transactions reported that September 2019 was the busiest they had experienced in several years. The timing — immediately following the by-election result and the confirmation of political continuity it implied — was not coincidental. Buyers who had been tracking the political calendar and timing their commitment decisions around its resolution had, with the majority’s expansion, received the signal they needed. The closings pipeline that had been building through the summer’s pre-election caution released in the early autumn in a volume that confirmed the hypothesis that political risk had been suppressing a meaningful quantum of transaction activity even in an otherwise healthy market.

Hurricane Dorian, which had devastated the Bahamas in late August and early September as one of the most powerful storms ever to make Atlantic landfall, tracked far enough north and east of Jamaica to spare the island any significant impact. The north coast was spared the anxiety that Irma and Matthew had produced in comparable seasons. Tourism remained on track for what would prove to be another record year. The market’s third quarter closed with the seasonal energy of a busy tourist summer supplemented by the political uncertainty premium unwinding — a combination that produced the strongest Q3 volume since the early years of the expansion.

NHT Modernises; Processing Times Improve

The National Housing Trust’s introduction of a digital application platform in the third quarter was a smaller but symbolically significant development. The Trust’s administrative processes had, for much of its history, been characterised by the paper-based workflows that created processing backlogs in high-demand periods and generated the friction that had historically made NHT lending slower than the market’s pace. The digital platform, which allowed contributors to submit applications, upload documents, and track approval status electronically, reduced processing times materially for a cohort of applicants who could navigate digital channels. The improvement was most significant during peak demand periods — precisely the times when the Trust’s capacity had historically been most stretched.

What This Means

The third quarter of 2019 closes Jamaica’s penultimate pre-COVID quarter in the best shape that many analysts have assessed the market to be in since the expansion began. Political uncertainty has diminished. Tourism is at record levels. Interest rates remain accommodative. The NHT is modernising. And the fundamental supply-demand balance — with population growth, urbanisation, and BPO employment creating sustained demand against a supply pipeline that, while larger than at any point in the expansion, has not yet fully closed the deficit accumulated in the 2008–2014 years — continues to underpin price appreciation at rates consistent with sustained rather than bubble-driven expansion.

The fourth quarter will close the year and set the baseline for what 2020 will bring. The calendar is approaching the constitutional deadline for the next general election, and the government will need to call it before the end of 2020. The market is watching the timing with the same attention it brought to 2016’s election. This time, however, it is watching from a position of strength that did not exist in 2016 — and with a political uncertainty premium that is notably smaller than it was then.

jamaica-homes.com | Market Analysis | Q3 2019

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