Jamaica
News - Real Estate - Sales
Source: Jamaica Gleaner, Ashford Meikle, March 25, 2007
High
prices slow residential real estate market
In June 2005, a three-bedroom
townhouse in Fort Charles, Stony Hill, sold for $8.3 million,
according to realtor Deborah Cumming. By December 2006, a
similar property sold for $14 million, a 69 per cent increase in
just 18 months.
MOVING PRICE
During the same
period, a typical one-bedroom apartment in New Kingston
appreciated by almost 100 per cent, said the realtor, its price
moving from $2.8 million to $5.5 million.
Cumming, at an
investors' forum, had predicted that real estate would remain a
"strong seller's market" for at least another year,
linking it to a shortage of properties on the market.
"Prices will
increase by double- digit percentages; mortgage rates will
continue to trend down with the competition in the mortgage
market," said Cumming at the Investment 2007 seminar hosted
by John Jackson's Investors Choice
magazine.
Cumming the
managing director of Century 21/Heave-Ho Properties in Jamaica,
said the housing shortage is mainly in the $5 million to $15
million price range, a point repeatedly made by real estate
agents.
"I have
several people now working with $15 million and you can't find
anything," said real estate agent Janet Maureen of Coldwell
Bankers.
She noted that a
lot of what is being sold for $15 million in Kingston is not
located in desirable areas.
"The entire
market has gone totally wacky, the demand has continued [from
2006] and overall, the demand is everywhere."
Developers,
however, are following their own schedule and continue to target
the top end of the market with offerings in the $20 to $40
million-price range in areas such as Liguanea, Norbrook,
Millsborough and the Golden Triangle in Kingston.
"Developers
are going into areas where expatriates and diplomats prefer to
live, and since property in these areas easily sell for US$1
million per acre so it's not economical for the developer to
construct units for middle income professionals," said
another real estate agent who requested anonymity.
"That is
why you find the townhouses in these areas going for US$300,000
and up."
The result is
dissonance in the market. The more upscale properties are moving
slowly, resulting in a buildup of inventory.
"The real
estate market is still very active, however with new developments
people are not buying as rapidly, because of a lot of negative
things out there," realtor Valerie Levy said in a previous
interview.
"People are
not buying from plans anymore. You find that buyers are asking
more about the developer's proven track record and the KSAC is
getting much more vigilante in its approval process."
But, not
everyone believes that the market's performance can be explained
only by the dynamics supply and demand.
"The fact is
that the availability of credit at lower rates of interest does
stimulate demand," said UTech lecturer, Andrew Mighty.
Mighty, in a
recent Sunday Business article, argued that the National Housing
Trust had contributed to the housing price hike when it recapped
mortgage loans at $3 million last August - an increase of 100 per
cent in less than a year.
Unwittingly, the
NHT's increase led to the development of a snob appeal, with homes
being priced out of the range for many middle-income professionals
in Kingston.
"You know,
there were some people in Kingston 6 and 8 who were shocked that
two middle income professionals could put their NHT benefits
together, borrow a couple million from us and afford to live in
these upper St. Andrew communities," noted a mortgage officer
at one of the country's building societies.
The officer, who
declined to be identified, concluded, "If you look at it I
really think prices started going through the roof from the day
NHT announced its increased benefits."
But real estate
agents disagree, noting that there just isn't enough inventory for
middle class professionals in the Corporate Area (Kingston and St
Andrew) compared to areas like Montego Bay, Spanish Town, Ocho
Rios and Clarendon where both gated and detached homes are being
built.
With most people
desiring to live in Kingston they turn to the nearest place where
they can get homes, in the $4 million to $8 million price range,
in areas considered to be 'decent' ? areas such as Portmore, with
communities like Bridgeport, Passagefort, Edgewater, Bridgeview
and Garveymeade preferred.
"An
improved Bridgeview home, with three bedrooms and a laundry room,
can go for almost $6 million,' noted Janet Maureen. "I have a
listing now in Sector F that has six bedrooms, four bathrooms and
a pool and it's actually $20 million," commented the agent as
she noted how even Portmore has been affected by the overall
increase in the market.
But she also notes
another phenomenon - the herd instinct, as people move with the
market.
"I think
Caribbean Estates, for one, has impacted on prices in Portmore ?
Over the years, once a new development goes up there the price of
that new development will invariably influence the prices of the
other units near by. When the Urban Development Corporation built
Bridgeview, the same thing happened in the properties that were
nearby."
Developed by Leo
Taddeo a stone's throw from Greater Portmore, Caribbean Estates
came on the market for $5.2 million for a two-bedroom detached
unit in 2005; now a similar unit has a price tag of $7 million.
But, there is
hope as not all areas are fully benefiting from the so-called real
estate boom.
"An
interesting thing is happening in Hellshire because normally once
we have lots for sale there, there would be rush on but there
seems to be a little slowing there. I don't what has caused it
though but the demand is not as high as it was," said Janet
Maureen.
"I am not
sure if it's because of Caribbean Estates where the people who
would normally have gone to Hellshire - considered upmarket in
Portmore - have opted to buy into Caribbean Estates."
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