Christopher Burgess | Developers can deliver affordable homes

Jamaica’s housing dream is a nightmare for over 12,000 families each year. Prices are soaring, supply is dwindling, and bigger loans will increase demand. There aren’t enough affordable homes.

Government should expect that raising the NHT loan ceiling from J$7.5 million to J$9 million will push prices higher- it’s an obvious market response. When the annual demand of 15,000 homes (NHT) outstrips output of just 2,200 units (PIOJ), seven to one, it turns the affordable housing market into a bidding war that most young professionals can’t win. A teacher earning J$160,000 a month has no chance at a J$20 million home, no matter how high the ceiling is raised.

It isn’t a credit crisis; it is a construction crisis. Regulatory delays, a lack of transparency around government land, and high construction costs drive up prices long before homes ever reach buyers.

CREDIT CAN’T SOLVE SUPPLY CRISIS

The NHT loan limit rose from J$2 million to J$15 million over two decades, yet housing output declined from 6,000 to under 2,000. During that time, the cost of a basic two-bedroom house climbed from J$2.5 million to J$20 million and now threatens to reach J$22 million. More credit hasn’t delivered more homes, just higher prices. These are clear signs of supply-side failure. That’s not a housing policy, it’s wishful thinking.

Supply-side housing policies, would streamline approvals, incentivise low-income developments, make government lands and infrastructure accessible, and providing cheaper financing for developers. Jamaica needs supply side reform.

LOCAL DEVELOPERS ARE PARTNERS

Instead of blaming local developers, the government must treat them as allies, like the foreign developers. With coordination and fair access to land, local developers could build 10,000 homes a year, just like we did in the 1970s and 90s.

Fair and transparent access to government-owned land is essential, as some credible developers have lost out to better-connected parties in land divestment. We need large-scale, mixed used master-planned developments, dedicated to low-income and middle-income affordable housing, for resident young professional Jamaicans.

INFRASTRUCTURE MUST LEAD DEVELOPMENT

Delays from NWC in approving water services can take several years, severely hampering housing projects. Kitson Town and Innswood have faced decades-long water shortages despite water balance surplus.

In Spanish Town, malfunctioning treatment plants block some developments. Developers are forced to build costly private sewage systems, pushing housing costs higher and increasing pollution risks. Continued expansion of sewerage and central systems must be at the forefront to make higher housing densities possible.

The OUR Act (1995) has empowered private utilities to fill some gaps, enabling projects like Bernard Lodge. The government must encourage private sector participation. With consistent support, costs could drop by 8 per cent and timelines by up to two years.

Flood control is another obstacle. St Johns Road could support over 2,000 new homes, but developers face high costs for drainage of up to $3 million per lot. Government must implement the drainage plan (2012); only four of 52 plans have been implemented to date, leaving many areas unfit for development.

BANKS AND BOTTLENECKS

Developers maintain good ties with banks, but securing construction loans remains onerous. Even with all approvals, the process can be expensive and long, highlighting the role of NHT and key private lenders.

On the sale side, mortgage disbursement delays drive up costs. Higher interest rates of 12 per cent can quickly rack up and can drive up sale prices by 5-12 per cent. Access to affordable, development-focused financing is needed, along with better disbursements processes. Foreign contractors, with cheaper capital, often outcompete local builders.

Registering a mortgage at NLA typically takes 2 to 4 weeks, but sometimes up to 6 or even 8 weeks, with the slightest misstep, making units more expensive. With better systems, this step could take less than a week.

HEART NEEDS A PULSE

Labour shortages have hit developers hard. Some developers have turned consistently to overseas contractors. HEART struggles with low certification rates, high dropouts, and weak engagement with developers. I recall a young man from August Town who gave up on construction after waiting two years without receiving his HEART certificate. HEART must be revitalised to meet today’s needs for formwork installers, tilers, electricians and photovoltaic technicians.

INCENTIVES NEEDED

The Jamaica Special Economic Zone Act (2016) (JSEZA) modernised the regulatory framework, offered tax and duty incentives, simplified business setup, among other benefits for developers. A similar model could fast-track land development for large-scale housing projects.

A dedicated land development body could set timelines for approvals, develop master plans for affordable housing and apply penalties for delays. One-stop permitting and tax incentives can close housing gaps and reduce the cost of housing by 10 to 15 per cent.

BUILD FOR THE PEOPLE WHO NEED IT MOST

Raising NHT loan ceilings may help a few lucky buyers, but without real reform, most young professionals and working-class families will remain locked out.

Developers need faster approvals, shovel ready, mixed-use community developments and transparent land divestment. This could reduce costs by 15 to 25 per cent, instead of rising another 10 per cent annually, and would bring two-bedroom homes closer to J$14 to $15 million, within reach of working families, rather than over $20 million.

The crisis is not a lack of credit; it’s a lack of concrete and steel. Until more homes are built, more money will continue to chase a few homes, and prices will keep rising, keeping the dream of homeownership out of reach for many young professionals and working-class families.

Christopher Burgess, PhD is a registered civil engineer, land developer and the managing director of CEAC Solutions Company Limited. He is currently a Jamaica Institution of Engineers council member. Send feedback to columns@gleanerjm.com