Ashford W. Meikle, Business Reporter
Valerie Levy, principal in Valerie Levy and Associates, says there is buildup in inventory of new properties from new developers entering the market at the tail end of the real estate surge.
The biggest news of the year for real estate was perhaps the increase in mortgage benefits from the National Housing Trust and the ensuing mortgage rates war among building societies.
In February, former Prime Minster, PJ Patterson, announced that the National Housing Trust would double individual benefits from $1.5 million to $3 million and while the move was welcomed by the real estate industry, some fretted that it would trigger an inflation in house prices, a charge that realtor Valerie Levy of Valerie Levy and Associates dismisses.
"Certainly not! I have not seen it. But what has happened is that you find that more people can qualify to buy a home when they combine their benefits," said Levy Wednesday in an interview.
The realtor notes that "there has been a pick-up in the sale of parcels of land."
NHT RULES
Still, according to one executive at a building society, the NHT benefits have resulted in a fall-off in the number of persons accessing the building society's loan funds.
"Our average loan used to be $3 million but now borrowers are accessing their NHT benefits so now we have to be going after the middle and upper end of the market," he told the Financial Gleaner.
As the competition grew, First Caribbean Building Society - the fastest growing in the $40 billion industry - threw down the gauntlet by offering borrowers rates as low as 13.01 per cent early in the year in addition to a series of campaign offerings such as the waiving of bank and commitment fees. In fact, in terms of visibility, FCIBJ pretty much dominated the industry.
By November, Jamaica National Building Society announced that it had chopped its rates to 12.99 per cent and in late December Scotia Jamaica Building Society announced a special 11 per cent mortgage facility for civil servants.
SHIFTING CONSUMER TASTES
Realtors and real estate agents point to a gradual, discernible shift in consumer taste as prospective homeowners became wary of buying properties solely from plans and began to hold developers to a higher standard even as the authorities became more vigilant monitoring building projects.
"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," said Levy.
"You find that buyers are asking more about the developer's proven track record and the KSAC is getting much more vigilant in its approval process and, in fact, has shut down some housing developments because the developer did not adhere to the approvals granted."
Some developers, for example, were found to be building three-bedroom units when their permits were for one-bedrooms, according to Levy, which has serious implications for the environment and carrying capacity of infrastructure."
Currently, brokers are seeing a buildup in inventory of new properties which Levy links to new and first-time developers entering the market at the tail-end of the real estate surge.
"You see, these new developers overextended themselves much more than they could manage, and so they are not delivering on time," said Levy. "But Realtors have become much more vigilant, ensuring that plans are approved and the density specifications are adhered to."
Additionally, the influence of home and gardening shows on cable TV are fuelling a new type of demand.
Buyers are exposed to what obtains in North America and they are looking at finishings, visiting the site and ensuring that whatever has been promised as finishing they will be getting it," noted Levy.
NEW PROPERTY DEMAND COOLS
Still, while there has been some cooling off in the demand for new properties, Levy pointed out that it is a sellers market in the existing home category.
"Buyers are not rushing to buy from plans as, say, two years ago. You are not going to pay for something you cannot see. Moreover, prospective buyers are no longer willing to give their money to a developer and wait 18 to 24 months so you find that, particularly in the high end of the market - above $12 million - resales are very robust with properties being sold quickly since buyers are not resistant to prices being asked for."
She noted that the desirable areas for existing homes are in high middle income areas of St. Andrew such as Hope Pastures and the upper end of the market in Seymour Lands (Golden Triangle), Bill Dunn (above the Millsborough Belt), Norbrook, and Jacks Hill.
In the middle-income tier, communities such as Mona, Havendale, Constant Spring Gardens, and Meadowbrook remain popular.
"People are looking for areas that are considered safe and where the homes have been kept up," said the realtor.
In the commercial sector, real estate agents pointed to the high demand - and small inventory - for small offices spaces, especially in the New Kingston area.
COMMERCIAL REAL ESTATE
Office space remains a hot commodity.
Cecile Diston, marketing manager for LOJ Property Management, said previously there was need for small spaces of 500 and 600 square feet.
Within days of advertising, the Winchester Business Centre, "had three layers of cheques waiting for the smaller units", signalling demand demand way beyond the available units.
In fact, the three-acre $700 million business centre was the first major commercial space developed in years in the capital.
Looking ahead at 2007, Levy predicted that real estate would remain buoyant.
"There are quite a number of projects coming on stream," she said.
"The new year will be very busy but don't expect prices to fall. If anything there might be a levelling off of prices."
ashford.meikle@gleanerjm.com
