Publication Date: November 3, 2023 | Coverage Period: October 3 – November 2, 2023 | Category: Monthly Review
Month in Brief
- Year-end transaction momentum building across all residential price segments
- Kingston and New Kingston apartment sector recording its strongest pre-sale activity in 2023
- VM Group reports 25% year-on-year growth in diaspora mortgage originations
- BOJ holds at 7%; December meeting expected to confirm the peak of the tightening cycle
- HAJ delivers units in Westmoreland; rural housing equity agenda advancing
- Construction input costs stable; NHT private developer pipeline moving toward site mobilisation
Housing Market
November brings the seasonal intensification of Jamaica’s residential property market that industry participants have come to expect in the final quarter of the calendar year. Buyers who entered the deliberation phase during the quieter August-September period are now moving to execute, and the combination of year-end urgency and improving confidence in the rate outlook is translating into an uptick in completed transactions across market segments.
The apartment and townhouse segment — which has emerged as one of the defining growth areas of 2023 — is recording its most active pre-sale period of the year in Kingston and New Kingston. Developments offering one- and two-bedroom units in the $18–40 million range are reporting strong demand from young professionals, many of whom are using NHT financing as the primary borrowing vehicle and supplementing with personal savings for the deposit component.
The gated community format continues to command premiums across all price points. In the sub-$20 million townhouse segment in St Catherine, well-marketed gated schemes are achieving 15–20% premiums over comparable open-scheme properties — a differential that reflects buyer willingness to pay for security, community management, and shared amenities. This premium has proven resilient even as affordability pressures persist in the broader market.
The housing deficit of over 100,000 units remains the structural backdrop against which all market activity is framed. New completions, while meaningful in absolute terms, are not closing this gap materially. The pace of delivery will need to accelerate significantly — across both the NHT-partnered private sector pipeline and independent developer activity — to begin making inroads into the accumulated shortfall.
Government Policy and NHT Activity
The NHT’s private-sector delivery model continues to advance. The seven projects — comprising 4,437 units — transferred to the Developers Programme earlier in 2023 are moving through the detailed planning and pre-construction phases. Industry sources suggest that the first of these projects is likely to reach active construction commencement before year-end, with others following in the first half of 2024.
The NHT’s Guaranteed Purchase Programme provides these developers with the financial certainty that conventional speculative development does not offer. By committing to purchase a defined tranche of units at an agreed price upon completion, the NHT effectively functions as a cornerstone buyer, unlocking construction finance on terms that would otherwise be unavailable to developers targeting the affordable segment.
The HAJ’s delivery record in Westmoreland and other smaller parishes reflects the government’s intention to ensure that housing delivery is genuinely national in scope. The concentration of infrastructure and economic opportunity in Kingston and St Catherine naturally draws demand, but the HAJ’s mandate extends to ensuring that residents of less economically centralised parishes have access to formal housing solutions on comparable terms.
Land titling remains a background priority with long-term significance. The NHT and HAJ’s continued work in formalising tenure — converting informal occupation into registered land title — is incrementally expanding the pool of Jamaicans who can pledge property as security for formal borrowing. This is a slow but consequential expansion of the market’s accessible base.
Monetary Policy and Affordability
The Bank of Jamaica is widely expected to hold its policy rate at 7.0% at the December MPC meeting. Headline inflation at 6.3% as of November sits just above the upper bound of the 4–6% target range, while core inflation at 5.6% sits within the band — a configuration that gives the MPC grounds to maintain its current posture without implying that conditions have materially deteriorated.
Market participants are increasingly building the assumption of a BOJ rate reduction in the first half of 2024 into their medium-term planning. This expectation, if validated, would represent a meaningful turning point for the commercial mortgage market: even a 50-basis-point reduction in the policy rate, transmitted over several months into retail mortgage products, would reduce the monthly payment on a $25 million mortgage by approximately $12,000–15,000 — a material improvement for a borrower at the margin of qualification.
The exchange rate has remained stable at above J$155 per US dollar, supporting the confidence of both domestic borrowers and diaspora investors. Dollar stability reduces the inflationary import channel and allows the BOJ to focus its rate decisions on domestic inflation dynamics rather than currency defence — a significantly more comfortable position than that faced by many regional central banks.
Construction Sector
Construction conditions in November are the most stable they have been since the supply chain disruptions of 2022. Steel prices, cement availability, and freight costs have all normalised from their crisis-era peaks, and Carib Cement’s sales performance through the second half of 2023 has been consistent with a market delivering at a healthy pace across multiple development corridors.
Project timelines, which slipped materially for many developers during 2022 and the first half of 2023 as input costs and supply uncertainty made budget management difficult, are now being more reliably maintained. This is important for buyers who have made purchase commitments with expected completion dates — delays in delivery create financial stress for buyers managing bridging arrangements between current accommodation and new property possession.
The NHT’s construction scholarship programme — which supports the training of skilled tradespeople — addresses a long-run constraint that is becoming more visible as the volume of active construction projects increases. Masonry, carpentry, plumbing and electrical skills remain the trades in greatest demand, and the pipeline of projects committed under the GPP will require a sustained supply of these skills over the next 24–36 months.
Diaspora Investment and VM Group Performance
VM Group’s reported 25% year-on-year increase in diaspora mortgage originations is the most significant financial institution data point on diaspora property investment in the current period. It confirms what anecdotal evidence has suggested throughout 2023: that the diaspora buyer market is not merely holding its own but actively growing, driven by a combination of improving mortgage product accessibility, rising awareness of Jamaican property as an investment asset class, and the strong performance of the Jamaican economy relative to the cost-of-living pressures facing many diaspora communities in the UK and North America.
The geographical distribution of VM Group’s diaspora book — heavily weighted toward Montego Bay, Kingston, and Negril — mirrors the broader pattern of diaspora property preference: north coast for lifestyle and rental yield, Kingston for long-term capital appreciation and family use. NCB’s diaspora mortgage offering is similarly oriented, and competition between the two institutions for this increasingly valuable market segment is driving product improvement that benefits all diaspora buyers.
Remittances continue to sustain family-linked property transactions at scale. Jamaica’s total remittance inflow — approaching US$3 billion on an annualised basis — represents a capital pool that, even partially directed toward housing, is a significant force in the market. Bank of Jamaica data on deposit dollarisation, which has trended to its lowest since 2011, suggests that an increasing share of these inflows are being retained in Jamaican dollar deposits and potentially channelled into local asset acquisition.
Short-Term Rental and Tourism-Linked Property
Jamaica’s tourism recovery is now well into its post-pandemic consolidation phase. Visitor arrivals are tracking strongly, hotel occupancy rates in the major resort areas are healthy, and the short-term rental segment — served primarily through international platforms — is capturing an increasing share of visitor accommodation spending. This dynamic is embedding short-term rental income potential into the property valuations of coastal residential assets, creating an investor logic that can sustain prices above what pure residential demand would support.
The implications for long-term residents in tourist corridors are complex. Rising property values benefit existing owners but create additional barriers to entry for first-time buyers and renters in these communities. The tension between tourism-driven investment demand and local housing affordability in coastal parishes is a policy conversation that is only beginning to surface in Jamaica, but that will need to be addressed as the short-term rental sector continues to grow.
Looking Ahead
The final weeks of 2023 will likely see a concentration of transaction completions as buyers and sellers finalise deals before the Christmas period. The December BOJ rate decision — which will either confirm the 7.0% plateau or, less likely, signal an early pivot — will set the tone for the mortgage market going into the new year.
The NHT’s pipeline of private-developer GPP projects represents the most significant housing supply commitment in the short-to-medium term. How quickly these projects reach construction commencement and, ultimately, completion will be the key operational story for the sector in 2024. If the pipeline delivers on schedule, Jamaica’s housing market could see a meaningful increase in affordable supply over the next 18–24 months — not enough to close the deficit, but a material contribution to narrowing it.
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