Discouraging housing costs
Have you been trying to buy your first home with little or no success? Are the prices quoted way above what you can afford? If so, you are among the many Jamaicans who are frustrated with the current housing market.
Finance Minister, Dr. Nigel Clarke, has publicly expressed the need for the government to provide housing solutions to lower income earners. He described the shortage of housing as a failure on the side of the market. His sentiments have been echoed by Prime Minister Andrew Holness. Holness has recently called on private developers to create provisions that cater to the lower-income section of the housing market. His administration has pledged to deliver 70,000 houses over the next five years, and will include houses for teachers, nurses, doctors, lawyers and others.
The Ministry of Economic Growth and Job Creation has launched a low-cost housing design competition. The competition forms part of the agency’s New Social Housing Programme (NSHP). According to the ministry’s website, the NSHP “was implemented in July 2019… to improve the housing condition of the country’s indigent population, provide quality, affordable and sustainable housing and associated services for the indigent and other vulnerable persons”. This has done little to tackle what some have described as the major issue facing potential home owners-high purchase costs.
Ms Rena Brown, a government worker, said she has been searching the market for her first home for well over a year now with no success. She has been seeking a house in St Catherine and said despite numerous attempts to close the result is the same, getting outbid at the eleventh hour. Her search started in Kingston. “I can’t afford anything there, the prices are ridiculous,” she said. She added that the average cost quoted for two-bedroom units in the corporate area was above $20 million. She explained that she was looking to purchase a home through the National Housing Trust (NHT) with her fiancé as a co-applicant. They’ve both received eligibility letters from the agency to cover $6.5 million each ($13 million in total). This she said this amount was proving to be insufficient in the current housing market, based on what she wants – a two- or three-bedroom home.
Oniel Esson and his wife are in a similar situation. They have also been seeking a house in St Catherine and have been given the same price range as Brown. Esson said the thought of using another lending agency to supplement the allocation given by the NHT was very daunting. He and his co-applicant would qualify for a total of $13 million but, he said, additional funds might be needed to finance any purchase. A mortgage plus a loan could end up making us house poor, “we could pay both but at the end of the day what about other bills, food and other expenses?” asked Esson.
The banks are another avenue for mortgages, but Brown described their requirements as hurdles to the process, especially when an attractive and low-cost home comes on the market. “The banks are willing to give you more but, by the time you complete all the requirements of the bank and get back to the seller the house is already gone, they won’t wait,” said Brown.
Ackeem Henry, a chemist, is looking to purchase his first home but wants to do so without a co-applicant. He, too, has found the market “overwhelming”. He decided to access his funds from a bank and just like Esson and Brown, he was priced out of a move to Kingston, where he works. Henry said the monthly payments were very high. Interest rates for mortgages at local banks are on average 7 to 7.5 per cent. the NHT’s interest rate ranges from 0 to 6 per cent. He now has his sights set on Portmore.
A source at the National Land Agency said proximity to urban areas and sale price for other properties in the area are major factors taken into account when valuations are done. Consequently, properties in Kingston and St Andrew will command higher prices. With development taking place in certain areas the price of houses in these areas will continue to rise.
