Publication Date: November 3, 2019 | Coverage Period: October 3–November 2, 2019 | Category: Monthly Review
Month in Brief
- Jamaica concludes its IMF Stand-By Arrangement programme, marking a historic economic milestone.
- Tourism sector on course for a record-breaking year; hotel occupancy strong ahead of winter season.
- Kingston and St Andrew residential property values continue to appreciate; demand outpaces supply.
- NHT Joint Venture and Guaranteed Purchase programmes generating new affordable supply across multiple parishes.
- Commercial mortgage rates broadly stable at 8–9%; BOJ maintains accommodative policy stance.
- Airbnb short-term rental market continues rapid growth; regulatory vacuum persists.
A Historic Economic Milestone: Jamaica and the IMF
The conclusion of Jamaica’s Stand-By Arrangement with the International Monetary Fund in November 2019 marks a watershed moment in the country’s modern economic history. After more than a decade of painful but ultimately successful fiscal adjustment — spanning the Extended Fund Facility from 2013 to 2016 and the subsequent Stand-By Arrangement — Jamaica has demonstrated to international markets and institutions that sustained fiscal discipline is achievable even under significant social and economic pressures.
The numbers tell the story clearly. Jamaica’s primary budget surplus has been maintained at approximately 7.5% of GDP through the programme period — one of the highest sustained primary surpluses of any IMF programme country in recent years. Public debt, which had exceeded 140% of GDP at the peak of Jamaica’s fiscal crisis, has been reduced to approximately 95% of GDP and is continuing to fall. The IMF’s own assessment, published in the November 2019 article on Jamaica’s path to higher growth, notes that the country is now in a fundamentally stronger position than at any point in recent decades.
For Jamaica’s housing sector, the significance of this milestone is layered. At the most immediate level, it reinforces investor confidence in the Jamaican economy and supports the case for further reductions in sovereign borrowing costs. Lower government borrowing costs create space for lower commercial interest rates over time, which — if passed through to mortgage products — would meaningfully improve housing affordability for the commercial market segment. At a broader level, Jamaica’s demonstrated fiscal credibility positions it to attract foreign direct investment in real estate and infrastructure on more favourable terms.
Housing Market Overview
The residential property market closed the third quarter of 2019 in a position of sustained strength. Transaction volumes in October were healthy across all price segments, with particular buoyancy in the mid-market and NHT-financed segments. The seasonal pattern of reduced activity through the peak hurricane months of August and September gave way to a characteristic uptick in October as buyers returned to the market and developers resumed active marketing of new schemes.
Property values in the Kingston Metropolitan Area continued their upward trajectory. Quality two- and three-bedroom residential units in established communities in St Andrew — from Barbican to Stony Hill, and from Cherry Gardens to Havendale — commanded sustained premium pricing. The New Kingston apartment corridor, where several high-rise developments are progressing toward completion, is expected to add significant new supply in the medium term, but current market conditions remain firmly in favour of sellers.
In St James, Montego Bay’s residential market benefited from the approaching winter tourism season. The high season brings elevated hotel occupancy, increased hospitality sector employment, and by extension, increased housing demand from both workers and visitors exploring longer-term accommodation options. Developers active in the Montego Bay market have noted strong enquiry rates in October, consistent with the seasonal pattern.
NHT Programme Delivery
The National Housing Trust maintained the momentum of its construction and delivery programmes through October. The Trust’s Joint Venture pipeline — spanning developments in St Catherine, Manchester, Trelawny, and St James — continued to progress, with completion timelines for several schemes now within the next twelve to eighteen months.
The NHT’s Guaranteed Purchase Programme continued to provide important demand certainty for smaller developers building in the affordable segment. By committing to purchase qualifying units at pre-agreed prices, the Trust effectively de-risks the developer’s receivables and enables construction finance on better terms. This mechanism has been a meaningful contributor to affordable supply over the past several years and continues to be an important tool in the NHT’s arsenal.
Stakeholder dialogue continued around the appropriate level of NHT loan ceilings. With construction costs having risen steadily in recent years — reflecting both material price inflation and the appreciation of skilled construction labour — there is mounting pressure to revisit the J$6.5 million ceiling for single applicants. The NHT has indicated it is keeping the matter under review, but no formal announcement has been made in the period under review.
Tourism and the Housing Nexus
Jamaica’s tourism sector is delivering a record year in 2019. Stopover arrivals are on course to exceed 2.7 million, with foreign exchange earnings from tourism expected to surpass US$3.5 billion. These numbers represent not just foreign exchange earnings — critical for macroeconomic stability and import capacity — but also a direct driver of employment, wage growth, and housing demand in tourist-adjacent communities.
The growth of the short-term rental sector, driven primarily by Airbnb and similar platforms, represents both an opportunity and a challenge for the housing market. The opportunity lies in the additional income available to property owners who convert units to tourist accommodation, particularly in high-demand coastal and urban tourist zones. The challenge lies in the progressive withdrawal of units from the long-term residential rental market, which constrains supply and drives up rents for Jamaican households that cannot afford or do not wish to purchase.
The regulatory vacuum around short-term rentals remains unresolved. The TPDCo and the government have not yet produced a bespoke regulatory framework, leaving the sector to develop in a largely unregulated manner. There is growing recognition in policy circles that this gap will need to be addressed, but no firm timeline for legislative or regulatory action has been established.
Finance and Investment
Commercial mortgage rates remained broadly stable in the 8–9% range through October. The Bank of Jamaica’s policy rate environment has been accommodative through 2019, reflecting the BOJ’s assessment that inflation — running close to the 4–6% target band midpoint — does not require a tightening response. This stability in the rate environment has been positive for the mortgage market, allowing lenders and borrowers to plan with a degree of medium-term certainty.
VM Group, JN Bank, and NCB continued to be the most active commercial mortgage providers. Each institution has been investing in its digital and customer service capabilities to streamline the mortgage application and approval process — an area where customer feedback has historically pointed to friction and delay. Improvements in this area would support higher transaction volumes and a better experience for first-time buyers in particular.
Remittance inflows remained strong. The US$2.4–2.6 billion in annual remittances that flow into Jamaica represent a critical source of household income and savings across the island. For many families, remittance savings accumulated over years provide the equity base for a first home purchase, often in combination with an NHT loan. The strong US economic environment in 2019 has supported remittance volumes from the largest diaspora market.
Diaspora Buyers
The diaspora buyer market remained active through October. JN Bank’s diaspora mortgage platform and the Jamaica National Group’s broader financial services offering continue to be the primary institutional channels through which non-resident Jamaicans access the property market. Demand from the UK diaspora — the largest single source of diaspora property buyers by volume — has been sustained, though some uncertainty about the UK’s political and economic trajectory in the context of Brexit negotiations has introduced a note of caution among some prospective buyers.
North American diaspora demand — from the United States and Canada — has been more straightforwardly positive, reflecting strong economic conditions in both markets. Diaspora buyers from the US and Canada tend to be drawn to beach-adjacent properties in coastal parishes and to retirement-oriented communities in cooler inland areas such as Mandeville in Manchester.
Post-Dorian Building Standards Debate
The policy conversation prompted by Hurricane Dorian’s devastation of the Bahamas in September has continued through October, albeit at a somewhat reduced intensity as the immediate humanitarian emergency receded from headlines. In Jamaica, the National Building Act’s enforcement provisions continue to be the focus of professional and advocacy attention. Architect and engineering associations have renewed their calls for a better-resourced and more systematic building inspectorate, arguing that the current capacity is inadequate to ensure code compliance across the island’s construction activity.
The NHT’s own construction quality standards — which go beyond the minimum code — have been cited as a model for what is achievable when institutional will and resources are aligned. Extending equivalent standards more broadly across the private sector would require both regulatory reform and significant capacity building in the inspectorate and in the construction industry itself.
Looking Ahead
The final two months of 2019 offer a broadly positive outlook for Jamaica’s housing market. IMF programme graduation removes a major source of uncertainty and reinforces the economic narrative. The tourism winter season will provide a demand boost in the western parishes. Transaction activity is expected to remain healthy through November and December, with the usual seasonal slowdown in late December.
For 2020, the housing market consensus is one of cautious optimism. The structural demand drivers — population growth, household formation, the housing deficit, strong remittances, and an active diaspora — remain firmly in place. The key variables to watch are the pace of NHT delivery, any policy changes to loan ceilings or contribution structures, and the evolution of commercial mortgage rates in the post-IMF environment. Jamaica Homes will monitor these closely in the months ahead.
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