CAMPBELL… Property prices in Jamaica have moved up significantly

President and CEO of the Victoria Mutual Group, Courtney Campbell, has red-flagged the miniscule increases in income granted to individuals annually in comparison to rising real estate costs, as the main impediment for young adults looking to purchase a house in Jamaica.

His remark follows a presentation by the Jamaica Chamber of Commerce last month on the Business and Consumer Confidence Index, which revealed that house buying plans of consumers fell to eight per cent over the period April to June – the lowest level in nearly two years.

“Property prices in Jamaica have moved up significantly, but incomes have not moved commensurately. Additionally, transaction costs such as deposits and closing costs associated with real estate purchases have also attributed to the marginal movement recorded for home buying plans,” Campbell said in an e-mailed response to Jamaica Observer queries.

According to the CEO, the requirement for house buyers to pay a deposit of 10 per cent of the purchase price and the associated closing costs which can amount to as high as an additional 10 per cent, has been a deterrent to many individuals seeking to purchase real estate.

Efforts by the Government through the National Housing Trust (NHT) to partner with credit unions in setting up a House MicroFinance Loan Programme for individuals earning $30,000 or less weekly to access up to $1.5 million for the initial transaction costs, including lawyer fees deposits and closing costs, could prove beneficial for some but still leaves many scrambling for a solution without incurring significant debt.

Pollster Don Anderson, in presenting the findings of Business and Consumer Confidence, noted that while consumers expressed a more cautious outlook on spending over the April to June quarter, vehicle buying intentions recorded a small increase to 16 per cent, up from a year earlier’s increase of 15 per cent. Still, the results for vehicle purchase remained below the average level over the past 17 years.

“Any apparent correlation between the two [the decline in home buying and the increase in vehicle purchase] is coincidental. These are two distinct markets, both of which are segmented and dissimilar, in terms of demographic, motivations, transaction costs and terms, with motor vehicle prices a small fraction of what real estate would sell for,” Campbell said.

http://www.jamaicaobserver.com/business/incomes-not-moving-with-property-prices-8212-campbell_106890