Realtors expect increase in property sales this year
Realtors say they expect an increase in demand for first-time homebuyers in 2019 even as they indicate that those who rent homes are experiencing harder times as property owners list with Airbnb, the online community marketplace that connects people looking to rent their homes with those who are looking for accommodation.
Immediate past president of the Realtors Association of Jamaica Howard Johnson Jnr says that whereas he endorses short-term rentals and not just Airbnb, it has a negative impact on the local market.
"The gains from short-term rentals are much more attractive than that of a local rental," he said, adding that "earnings can be generated by a much more stable currency such as the US dollar."
Broker at Coldwell Banker Jamaica Realty Andrew Issa says that he is expecting more Jamaicans to express interest in buying a house during this year.
"I predicted 2019 will be a very strong year for real estate as demand continues to be driven by a stable, strengthening economy with low mortgage rates," he said. "Jamaica has been back on the international list (as a country in which) to invest from early 2018. While crime did slow the momentum, it appears that Jamaica's economic indicators are within the parameters for foreign investors," Issa added.
He said that the sellers' market continues to strengthen across the board in both residential and commercial markets but noted that prospects are challenging for first-time homebuyers.
"In the residential market, you have first-time homebuyers who now qualify to buy based on their NHT (National Housing Trust) mortgage points and low-interest rate mortgage instruments being offered. Unfortunately, demand is still outpacing supply. As the economy continues to grow more and more, young professionals are placing their priority on buying their first property," said the real estate broker.
Johnson said that he is anticipating more persons looking for investment properties for short-term rentals as well as the demand by first-time homebuyers to increase. "I'm suspecting that the new home starts promised by the Government, through the NHT, will also resolve many of the housing dilemmas now being experienced," he said.
He noted that while the cost of houses seems to be trending up, "the higher price ... is very subjective as sales are being generated despite what is being perceived. In many cases, persons are still financing their homes due to competition on interest rates in the marketplace. I have not observed any disruption in the mortgage market, but rather, more aggressive marketing for your business by financiers".
Issa said "Investors are liking the returns being gained from the rental market and also seeing a 10 per cent annual increase in prices bring a very attractive mix to their investment portfolio. These investors continue to buy (at) locations that will attract expatriate clients and bring returns in US dollars."
He also observed that "downsizing is a segment of the market that is growing. The ageing population is beginning to make the choice that downsizing is a practical and sound economic decision.
According to the broker, commercial demand is also growing. "The daily request is, 'Find me a commercial building with an ROI (return on investment) of seven to nine per cent, and I will buy it'," said Issa, referring to potential investors. "So with all these small financial institutions being launched, I expect to see much more activity in developments of this nature. These new, young managers are aware of the built-up demand by young entrepreneurs searching for locations," he added.
Issa also said that demand continues to grow for business process outsourcing space and that it will drive additional commercial build-out.
Despite the higher costs for houses, he does not expect that to inhibit sales. Issa said that "all mortgage companies have a similar formula for approvals, and with more institutions pushing for a larger share of the real estate market, I expect that these homes will be financed with buyers having two to three options to choose from".
Airbnb investors, he noted continued to be a factor. The realtor said that the market for Airbnb is definitely a factor in the increase in apartment purchases.
However, he noted that "it is not for the faint of heart investors" considering the time and detail involved in managing the units.
Issa believes that overall, the real estate market in 2019 will bring attractive results for both private investors and financial institutions.
"Don't be surprised to see very large properties change ownership this year as owners use the cash (from their sale) to expand their businesses while remaining tenants" by renting the same properties, he said.