Jamaica’s Housing Market Defied the Pandemic. Now the Hard Part Begins.

Kingston, Jamaica — 1 December 2020

Jamaica’s property market entered 2020 with momentum. Transaction volumes were healthy. NHT loan demand was growing. Young professionals were buying in greater numbers than at any point in recent memory. Then, in March, a global pandemic brought much of economic life to a halt, and Jamaica was not spared. What followed in the island’s housing market was something that few predicted: not a collapse, but a pause, followed by a surge in demand that has left the market tighter and, in many segments, more expensive than before the crisis began.

The Pause and the Pivot

In the first months of the pandemic, uncertainty dominated. Potential buyers paused. Developers held off on new launches. Lenders tightened underwriting standards in anticipation of the economic damage ahead. Transaction volumes dipped. The construction sector, which was already contending with imported material costs and skills shortages, faced additional disruption from movement restrictions and reduced site access. The conventional expectation was that the economic contraction caused by the pandemic would weigh on housing demand and eventually on prices.

That expectation was only partially fulfilled. As the pandemic extended through 2020, a different dynamic began to emerge. With travel restricted and social activity curtailed, Jamaicans both on the island and in the diaspora redirected attention and savings toward property. The home became more important, both practically and symbolically, as a place of work, education, refuge, and investment. Demand for homes with outdoor space, larger living areas, and reliable internet connectivity increased. The Bank of Jamaica’s policy rate, cut to its lowest level in history to support the economy, made mortgage financing cheaper than at any previous point on record. Those conditions produced a second-half recovery in market activity that surprised many observers.

Supply Could Not Keep Pace

The surge in demand collided with a construction sector that had been operating below capacity for much of the year. New housing starts were delayed. Completions were pushed back. Materials costs, already elevated, increased further as global supply chains struggled to recover from the disruption of the pandemic’s first wave. The result was that buyers competing for a constrained supply of available properties found themselves in a tighter market than the one they had been expecting to enter. Properties in the most sought-after affordable segments, scheme homes priced below fifteen million dollars in St Catherine and surrounding parishes, were clearing more quickly than at any point in recent years.

Diaspora buyers, whose remittance flows to Jamaica proved resilient through the pandemic and whose appetite for Jamaican property is a consistent feature of the higher-end market, remained active. The north coast, in particular, continued to attract interest from Jamaicans overseas and from international buyers seeking a Caribbean base with lifestyle appeal.

What 2021 Will Need to Deliver

The conditions that drove Jamaica’s housing market through the second half of 2020 are not permanent. Interest rates at their current levels reflect an emergency response to an exceptional crisis, and the Bank of Jamaica has signalled that normalisation will follow economic recovery. When that happens, the affordability landscape for first-time buyers will shift, and the demand that has supported prices through the pandemic period will face a different set of constraints. The challenge for Jamaica’s housing sector in the period ahead is to use the current window of low borrowing costs and heightened demand to build supply rather than simply to raise prices, so that the market that emerges from the pandemic is more accessible, not less.

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