Jamaica Homes Housing Affordability & Cost of Living Review — January 2019
- Jamaica closes 2018 with three consecutive years of GDP growth, the longest sustained expansion since the late 1980s
- JLP government completes a third year in office with macroeconomic credibility intact and an election mandate heading into its second half
- Housing demand remains strong as employment growth increases the pool of Jamaicans eligible for NHT and commercial mortgages
- Developers active in upper-middle and luxury segments of Kingston and Montego Bay while the affordable supply crisis remains unresolved
- Remittances from the Jamaican diaspora hit new records in 2018, sustaining household incomes and property investment across the island
- Exchange rate stability has held through 2018, preserving the purchasing power of diaspora buyers transacting in Jamaican dollars
A Jamaican housing market review written in January 2019 is, by the standards of the island’s modern economic history, the product of an unusually favourable moment. Three consecutive years of GDP growth — modest by international comparison but remarkable by Jamaica’s own — have delivered an economy that is perceptibly more functional than the one the Jamaica Labour Party inherited in February 2016. Employment is up. Formal wages are growing. The private sector is investing in ways that have not been common since before the global financial crisis. And the housing market, which is perhaps the most sensitive barometer of household economic confidence, is active in ways that would have been hard to predict three years ago.
The JLP government, now three years into its term, has earned the macroeconomic credentials that the PNP’s difficult stewardship of the IMF Extended Fund Facility began to build. Holness and his administration — having accepted the IMF programme as their inheritance rather than their own design — have managed to deliver on its fiscal requirements while maintaining political coherence and advancing some of the growth agenda that the programme’s austerity logic had suspended. The question as 2019 begins is whether the third and fourth years can deliver on the housing promise that the government’s early rhetoric raised without the institutional architecture to fulfil it.
The Employment Foundation
The single most important housing market development of the past three years has been the decline in unemployment. From the mid-teen percentage rates that characterised the peak of the adjustment period, unemployment has fallen to around seven percent — a figure that, for Jamaica, represents something close to structural normality. This improvement is not merely statistical; it directly expands the pool of households who can qualify for formal mortgage finance. Every percentage point of unemployment reduction represents thousands of additional families who move into formal employment, begin making NHT contributions, and eventually accumulate the eligibility to access mortgage support.
The NHT has been the institutional beneficiary of this expansion. Contribution volumes have grown with the employed base, strengthening the Trust’s financial position and expanding its lending capacity. The Trust processed a record volume of applications in fiscal 2017-18 and is on track for another strong year. This is meaningful progress. The constraint remains supply: the pool of mortgage-eligible buyers has expanded faster than the pool of NHT-eligible, formally titled, affordably priced units they can buy.
The Remittance Pillar
Remittance flows from the Jamaican diaspora reached record levels in 2018. Bank of Jamaica data confirmed that remittance inflows exceeded US$2.4 billion, a figure representing roughly fifteen percent of GDP and providing a stable, countercyclical income supplement to hundreds of thousands of Jamaican households. For the housing market, remittances function in multiple ways: as a direct funding source for construction and purchase; as income that supplements local earnings to support mortgage serviceability; and as the primary source of the deposit capital that formal mortgage applications require.
The diaspora’s direct investment in Jamaican property — distinct from remittances sent to resident family members — is harder to measure but is clearly growing. Property exhibitions for Jamaica-based developers and agencies in New York, Miami, London and Toronto have become increasingly professional and well-attended events. The segment of the market that serves diaspora buyers directly — gated communities, managed developments with absentee-owner services, resort-community villas — has grown to become a meaningful and distinct market segment with its own supply, pricing and marketing dynamics.
Where the Market Is Moving
Spatially, Jamaica’s residential property market in 2019 is most active along three axes. The Kingston Metropolitan Area remains the primary market by volume and value, with particular activity in the New Kingston professional apartment segment, the traditional middle-class suburbs of St. Andrew, and the northern parish of St. Mary for buyers seeking value outside the capital’s premium zone. The Montego Bay resort corridor in St. James is the second major axis, animated by tourism’s strength and the short-term rental economy’s yield premium. And the Spanish Town to May Pen corridor in St. Catherine is increasingly the frontier of affordable housing development, where land prices allow construction that the Kingston market has long since made economically impossible.
New developments in St. Catherine — the parish that has become Jamaica’s fastest-growing by population as Kingston overflow pushes families into commuting distance rather than the city proper — represent the most visible attempt at affordable supply. The NHT has been active in this space. Private developers, attracted by lower land costs and infrastructure improvements along the Highway 2000 corridor, have also launched projects. These developments are genuine additions to supply. The commuting burdens they impose on residents — long journeys in a country with limited public transport — are a cost that buyers accept in the absence of affordable alternatives closer to employment centres.
What This Means
For buyers, January 2019 presents conditions that merit decisive action rather than continued deferral. Rates are the most favourable in a generation. Employment is strong. NHT contributions made during the recovery years are now maturing into eligibility. The market will not remain this buyer-friendly indefinitely; interest rate cycles turn, and the current stability of Jamaica’s monetary framework is not a permanent given.
For renters, the cost of rental in urban Jamaica continues to rise faster than wages in many communities. The incentive to move from renting to ownership is, if anything, stronger than it was three years ago. Households that have been building deposit savings during the recovery period should assess their current position relative to NHT eligibility with urgency rather than patience.
The Outlook: Finishing Well
The JLP government has approximately eighteen months before the outer limit of the current mandate requires a return to the electorate. The housing deficit is a live political issue. The tools to address it — faster land regularisation, developer incentives for affordable construction, NHT limit increases, expanded schemes in growth parishes — are available. What remains to be tested is whether the political will to deploy them at the required scale materialises in the time that remains. The macroeconomic foundations laid over the past three years are the most solid Jamaica has had in a generation. Building on them, in the literal as well as metaphorical sense, is the challenge that 2019 puts before the government and the industry alike.
This review is produced for informational and journalistic purposes only and does not constitute financial, legal or investment advice.
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