Jan 04 2010
As we turn the page on 2009, a challenging year globally, we all wonder what 2010 has in store for Jamaica's real estate market. With a look back at the last 6 months of 2009, we may be able to see what shape the Jamaica real estate market might take for 2010.
Stimulus package - In July 2009, with real estate transactions trending downwards, some realtors felt that we were heading towards a buyers market. This prompted the government to bring forward the reduction in transfer tax originally intended for January 1, 2010, to August 1, 2009. Leading realtors noted a spurt in real estate transactions, and we had the expansion of one real estate agency (La Maison), and the opening of a Re/Max franchise, suggesting some room for growth in the market.
Property development - In general, it appears to the casual onlooker that not much new development took place in 2009, and developers seem to be just finishing up properties that were in the pipeline with a view to get them sold as quickly as possible. Carib Cement, a major provider, cut cement prices to clear inventory, and at least one luxury townhouse complex was being sold at very reduced prices. Some NHT projects were put on hold, while others were approved. Go figure. An attractive St Catherine project, El Prado Verde, has caught some attention.
Mortgages - Home equity loans are on the rise, but for the leading mortgage lenders, JNBS and VMBS, new mortgages declined in 2009. Delinquencies also increased, including at the NHT. Auction properties have likewise increased, but there are few takers when they get to auction. NHT regardless announced new benefits, and confirmed they had the cash to back it. JNBS declared a profit, however, so it seems no government bailout is needed for our mortgage market just yet.
So we can make a few educated guesses based on the foregoing. The number of approved mortgages will stabilize or continue to trend downward based on worsening economic conditions. There probably will be no flood of new or existing inventory to fuel a true buyers market across the board, as people may take home equity loans instead of selling, and although one developer is taking a bet, developers seem generally cautious about new projects based on the trends of current ones. As opposed to upgrading, renovation is also an option homeowners will likely explore, not to mention the fact that there are deals to be had in the rental market that potential buyers may also choose to opt for. On the flip side, the intended economic effect of the stimulus package is not likely to be fully realized.
Even with the above information, it will be difficult to see beyond the first six months of 2010. One thing is for certain, both buyers and renters are more discerning, shopping around more, and using the internet in their search. Person looking to move real estate in 2010, whether selling or renting, should endeavour to provide value and be open to negotiation.
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