Publication Date: 3 June 2021 | Coverage Period: 3 May – 2 June 2021 | Category: Monthly Review
May in Brief
- Self-build housing completions surge; hardware stores report record month-on-month sales.
- NHT releases second tranche of 2021/22 loan approvals across all parishes.
- Portmore records strongest residential sales quarter in four years, agents confirm.
- Remittances maintain elevated pace; BOJ reports continued high inflows from diaspora.
- Steel and timber costs reach multi-year highs; contractors warn of project delays.
- BOJ policy rate unchanged at 0.50%; inflation nudges upward on imported goods.
Housing Market Overview
May 2021 has delivered a market characterised by extraordinary tension between two powerful forces: surging demand that shows no sign of abatement, and rising input costs that are beginning to price some buyers out of the new-build market. The result is a bifurcated landscape in which the resale market for well-maintained existing properties is extremely active, while some new-build projects are experiencing delays or price revisions that are testing buyer patience and developer margins.
The self-build segment has been the standout story of the spring. Hardware retailers across Kingston, St Catherine, St James, and St Elizabeth report that sales of cement, steel, roofing materials, and sanitary ware have been running significantly above the same period in prior years. The combination of expanded home time — as remote work and school closures keep families at home for more hours than at any period in memory — and improved access to NHT and bank financing has catalysed a wave of construction activity that is visible in communities across the island.
This self-build momentum is not uniformly distributed across income bands. Those with access to formal-sector employment and NHT contributor status are best positioned to access structured financing. The informal self-build sector — characterised by incremental construction funded from savings, remittances, and informal credit — is also active, though the rising cost of materials is a more acute constraint at this level, where project budgets are less flexible.
Government Policy
The NHT’s first-quarter performance under the 2021/22 fiscal year targets has been described as tracking ahead of schedule. The Trust’s loan approval pipeline reflects the broader market strength, with applications running at elevated levels in St Catherine, St Andrew, and St James. The Trust’s zero per cent interest rate for the majority of contributors remains a powerful driver of demand, effectively making NHT the most competitive mortgage product on the market for those who qualify.
The Bank of Jamaica maintained its 0.50 per cent policy rate at its June monetary policy meeting. The MPC’s assessment noted that inflationary pressures from global commodity markets and shipping costs are feeding into Jamaican consumer prices, but that the underlying demand picture domestically remains insufficient to justify a tightening of monetary conditions. Governor Byles has indicated the Bank is monitoring the inflation trajectory closely, setting the stage for a potential policy reassessment later in the year should price pressures persist.
The state of public health emergency and nightly curfew regime, which has been in place across several parishes since mid-2021, continues to affect construction activity. Sites operating with a labour force drawn from communities subject to curfews face reduced productivity in early morning shift start times and evening-shift continuation, adding further cost and schedule pressure to project timelines.
Construction Sector
The cost environment for construction has deteriorated further through May. Steel reinforcing bar, which is imported, has continued to track global commodity price increases, with some contractors reporting price increases of 30 to 40 per cent compared with the first quarter of 2020. The root cause is well understood: a combination of post-pandemic infrastructure spending in major economies, supply disruptions in producing countries, and extraordinary demand for shipping containers has driven steel prices to levels not seen in years.
The timber market has been similarly affected. North American lumber prices have been at record levels, and while Jamaica sources some timber locally, imported species and processed timber products — joinery, window frames, flooring — have all increased significantly in cost. Contractors building to fixed-price contracts are particularly exposed; those with cost-plus arrangements are managing better but are finding that client approvals for cost variations are creating friction and delay.
Despite these pressures, the volume of construction starts remains high. Developers and self-builders who have committed to projects are pressing ahead, absorbing higher costs where they can and seeking substitutions where they cannot. The longer-term consequence may be that some projects are completed to a lower specification than originally planned, or that completion timelines extend materially.
Major Developments
Portmore has delivered its strongest sales quarter in approximately four years, according to agents active in the market. The combination of affordable entry prices, proximity to Kingston, improved road access, and strong NHT loan availability has created market conditions in Portmore that are essentially ideal for first-time buyers. Schemes of between 100 and 400 units in the Passage Fort, Independence City, and Greater Portmore areas are all reporting strong take-up.
In Kingston, the downtown rejuvenation story continues. The Urban Development Corporation is progressing several mixed-use projects in the waterfront and market district areas that, while primarily commercial in their immediate impact, are expected to improve the investment context for adjacent residential development. The revitalisation of the Kingston waterfront has long been discussed; there is growing confidence in the development community that the current political and investment environment is more conducive to delivery than at any prior point.
Infrastructure
The Jamaica Urban Transit Company (JUTC) has announced route adjustments in response to ongoing road works in the Kingston metropolitan area. While the immediate effect on commuter patterns is manageable, the longer-term significance for residential property is meaningful: communities that are well-served by public transit command consistent premiums in the rental market and, increasingly, in the sale market as buyers who do not own vehicles factor in transport accessibility.
Water supply infrastructure in new residential communities in the outer parishes remains a development constraint. The National Water Commission is working through a capital programme to extend mains connections to communities in Manchester, Clarendon, and St Elizabeth, all of which have active residential development pipelines awaiting utility infrastructure to make units habitable and lendable.
Investment and Finance
The mortgage market remains highly competitive among commercial lenders. The presence of Victoria Mutual Building Society, JN Bank, NCB, Sagicor, and several credit unions in the mortgage space has kept pricing keen and service standards high. For borrowers combining NHT and commercial mortgages — a common approach among buyers whose purchase price exceeds the NHT loan limit — the blended rate is historically attractive.
Developer financing — through which buyers make stage payments during construction rather than drawing down a conventional mortgage on completion — is increasingly common in the Kingston apartment market. This mechanism allows developers to de-risk their projects and provides buyers with a structured pathway to ownership without the full upfront capital requirement of a completed-unit purchase.
Diaspora Activity
The Bank of Jamaica’s monthly remittance data confirms that inflows from the Jamaican diaspora remain at elevated levels. The United States, the United Kingdom, and Canada — the three primary sources of remittances to Jamaica — are all reporting sustained flows as the pandemic’s economic impact on diaspora Jamaicans has been, on balance, less severe than on those at home. A meaningful portion of these flows continues to be directed toward housing-related expenditure: mortgage payments, construction materials purchases, and land acquisition.
Affordability
The affordability picture in June 2021 is mixed. For NHT contributors with stable employment, the combination of historic-low interest rates and the Trust’s expanded loan offerings means that homeownership is more financially accessible than at almost any prior point. For those outside the formal employment system — a large segment of Jamaica’s population — rising materials costs and the absence of concessionary financing make homeownership increasingly elusive.
Regional Context
The Caribbean hurricane season formally commenced on June 1, 2021, and with it the annual period of uncertainty that affects construction activity, insurance markets, and — to a lesser extent — residential transaction volumes. Jamaica has not been a frequent direct-hit target for major hurricanes in recent years, but the threat shapes building standards, insurance premiums, and the psychology of property ownership across the island.
Looking Ahead
The June outlook for Jamaica’s housing market is one of sustained activity against a backdrop of cost pressure. The demand fundamentals — structural housing deficit, demographic growth, rising aspiration among younger Jamaicans, and diaspora capital inflows — remain firmly in place. The challenge for the market over the coming months will be managing the cost environment in construction without pricing out the buyer segments that have been driving transaction volumes.
The hurricane season, now underway, will be watched closely. A significant weather event affecting Jamaica could disrupt construction timelines, damage existing housing stock, and temporarily redirect NHT resources toward emergency response. The market’s resilience to such events has been demonstrated before; the hope is that resilience will not be tested in 2021.
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