Private housing developers have an increased presence on the real estate market, following a decline of 56.1 per cent in the number of housing units started by the National Housing Trust (NHT) and the Housing Agency of Jamaica (HAJ).

According to the Planning Institute of Jamaica (PIOJ) second quarter economic report on Jamaica’s performance, the country saw a decline in building construction which reflected lower levels of residential construction by the NHT and HAJ, in addition to a 3.1 per cent decline in mortgages held by the Government-owned housing institutions and financial institutions.

For the three-month period ending June, the NHT reported a decline of 170 housing units on which construction should have started, while there were no housing starts for the HAJ throughout the period. However, there has been a noticeable increase in private developers starting housing units.

“We haven’t received any information as yet as to why the housing agencies had the declines,” PIOJ stated.

President of the Realtors Association of Jamaica (RAJ) Edwin Wint told Sunday Finance that the decline in government agencies starting construction of housing units would indicate that the private developers are satisfying the demands of the market.

The 2014 Economic and Social Survey of Jamaica — also published by the PIOJ — stated that starts by the private developers under the Interim Financing Agreement with the NHT increased by 43.7 per cent to 388 units last year.

For that same year, housing starts by the HAJ plunged from 938 units to 99 units, while the NHT reported an 8.3 per cent decline in units started to 1,548. The decline in units from the two institutions resulted in an overall decline of 29.8 per cent for 2014.

“While I can’t speak for the institutions, it must be an internal decision why they are stepping back… It could be that the private developers can do it more efficiently, in terms of controlling the cost of construction and the selling of units,” Wint stated.

The development projects included 15 housing units at Whitehall Phase III, Westmoreland; 25 units at Holland Estate Phase I, Trelawny; and 348 units at Jacaranda Phases II and III, St Catherine.

“What you may find is that there is decline in the market for houses over $40 million and a shift towards houses in the price range of $7 to $15 million. So there is a shift happening between market segments…the information that we have suggests that there is a slight decline overall, but nothing that is surprising given the macroeconomic situation.

“But you will find that more persons are getting into the business of developing and selling real estate because there are lots of activities going on in the market,” Wint added.

Over the years, Jamaica’s real estate industry has been performing below its potential due to weak economic growth, high inflation and crime rates. Property sales are somewhat at a standstill, while domestic rentals have soared.

In fact, real estate sales in Jamaica have been driven partially by wealthy foreign and expatriate homebuyers, who may pay in foreign currency in cash.

Amid the decline in residential construction and mortgages, the construction industry saw growth of an estimated 1.4 per cent, led by other construction components which supported higher expenditure in telecommunications, National Works Agency road construction and civil engineering activities of the Jamaica Public Service.

The areas saw growth from $1.2 billion to $3.3 billion, $330.6 million to $382.7 million and $361.9 million to $1.6 billion respectively.

“The downturn in residential construction was partially mitigated by increased hotel expansion of Bahia Principe, Royalton, Karisma, Riu Palace, Braco. Cement supply, which is an indicator of construction activities, increased by 22.5 per cent relative to the corresponding quarter of 2014,” the PIOJ quarterly report stated.