low housing demand
Published:Wednesday | November 19, 2014 | 5:15 PMDaraine Luton
FEWER THAN 18,000 Jamaicans with income to purchase homes are desirous of doing so, the National Housing Trust (NHT) has said.
A report prepared for Parliament's Public Administration and Appropriations Committee (PAAC), shows that the total effective demand for NHT housing solutions between April 2009 and March 2014 was 17,339.
The term effective demand is a representation of the actual amount of goods or services that buyers are purchasing in a given market. It is a reflection of the extent to which buyers' income, perceptions and needs combine to result in an actual purchase rather than a mere desire to purchase.
Notwithstanding the low demand, the NHT has only written 4,753 loans over the period which represents 27 per cent of demand captured in its survey.
Martin Miller, the acting managing director of the NHT, told the committee that approximately 75 per cent of persons contributing to the NHT are not benefiting. He said there are currently 444,000 contributors and that there are 101,000 mortgagors.
"NHT needs to do more to enable a larger group of beneficiaries from the contributors," Ed Bartlett, the PAAC chairman, said.
Miller said the NHT's management is currently reviewing the loan amounts and intends to make a recommendation to the board by January on whether to raise the ceiling from $4.5 million for a contributor.
"The analysis of demand and the NHT's satisfaction of this must be viewed from an economic standpoint," the report said.
"Housing is a good just like any other. Changes in disposable income over the period would have had an impact on the demand for both. Adjustments to salaries over the period have been minimal, while inflation has eaten away nearly half of their values since 2009. While shelter is a basic necessity, home ownership is not, and consumers will put off their intended goals of owning a home so that they can afford other necessities like food and health care," the report said.
It referenced data published by the Statistical Institute of Jamaica which said that it costs the average new home buyer 45 per cent less to pay to rent than to pay mortgages.
diversifying
Meanwhile, the NHT said there is a low demand for even the cheapest houses. Donald Moore, senior general manager at the NHT, said both demand and supply for those units are low.
"We are looking at diversifying the options available and that, we believe, will drive some more demand from those persons who are eligible," Moore said.
The First Step Housing Programme has seen the expenditure of $14 million, way below the $72 million which was budgeted.
First Step homes are constructed at a cost of approximately $1.1 million each, excluding land and major infrastructure works. The unit is a superstudio with floor area of 29.7 metres (320 sq ft), and adequate facilities for expansion.