Real estate sales see resurgence
The National Land Agency (NLA) indicates that some $43.5 billion in real estate sector sales were completed islandwide in 2010, with local realtors pointing to increased cash sales and the determination by many to take advantage of distressed property sales on the market.
The 2010 performance exceeds the 2009 performance of $38.5 billion and comes within kissing distance of sales in 2008 when $49.4 of property was sold locally. In 2007, $56.1 billion worth of property was sold on the island.
According to Howard Johnson, president of the Realtors Association of Jamaica and CEO of Howard Johnson Realtors Limited, "At Howard Johnson Realty, we saw more cash sales in 2010 than we did in the two previous years."
Johnson added: "For most of 2010 it was a buyers' market. Many Jamaicans were able to get deals and those that had cash resources or could get access to funding sought to take advantage of the real-estate market for investment purposes. In the latter part of 2010, interest rates were on the verge of being reduced. That made real-estate investments more attractive and will continue to be that way throughout 2011."
In a year in which mortgage assets for local building societies have remained flat and delinquencies for the island's chief housing developer,the National Housing Trust (NHT), have passed the billion dollar mark, the real-estate market nevertheless showed signs of resuscitation.
Edwin Wint, immediate past president of the realtors association, indicates that the uptick may be largely due to purchasers intent on taking advantage of foreclosures. "Purchasers sought to take advantage of opportunities in the market," Wint stated.
The most significant increase was in the high-population centres of the southern region, which comprises Kingston, St Andrew, and St Catherine. Sales in the south totalled $29.5 billion, some $5 billion more than the $25.7 billion posted in 2009. The record is close to the $30.3 billion of 2008 but below the $33.3 billion in property sales posted for 2007 for this area.
Of the remaining three regions under which data is grouped by the NLA, sales performance was comparatively flat, with an absolute decline in Trelawny, St James, Hanover, and Westmoreland, which are grouped as the western region and which saw sales of $5.7 billion, coming down from $6.1 billion in 2009, $9 billion in 2008, and $7.2 billion in 2007.
Showing a marginal increase were the northern parishes of St Thomas, St Mary, Portland, and St Ann, which had property sales of $3.5 billion, an improvement over $3 billion sold in 2009, but less than the $4.4 billion registered in 2008 and $5.1 billion in 2007.
In the middle ground was central Jamaica where the parishes of St Elizabeth, Manchester, and Clarendon showed a $700-million improvement over 2009, with $4.9 million in sales compared to $3.7 in the year prior.
With the mortgage performance of building societies flat, the increase in real-estate sales may be reflected on the balance sheet of the NHT, which lowered lending rates by one per cent in mid-2010 and also increased the loan ceiling to $4.5 million per individual. To a lesser extent, the increase might also be due to some cash sales, Edwin Wint posits.
According to Bank of Jamaica (BOJ) data,in September 2010, total mortgage loans for the four building societies stood at $81 billion for residential mortgages, and $1.7 billion for commercial mortgages, a similar picture to the records of March 31, 2010, when total residential mortgages on the books was $80.9 billion compared to $1.7 billion in commercial mortgages.
The BOJ notes that in 2009, there was a 43.0 per cent reduction in residential loans, in contrast to an expansion of 27.9 per cent at the end of 2008.