For the purposes of this column the writer interviewed a number of players in the real estate market.

Jamaica’s housing market has seen a consistent shift in favour of the seller throughout 2015 and certainly thus far through 2016. Though the market constantly cycles between a “seller’s market” and a “buyer’s market”, given its current shortage of inventory coupled with the even shorter inventory of desirable homes within those options, the market today is arguably tipped in favour of the (informed) seller.

The Jamaican population has become increasingly tech savvy and purchasers have become more cognisant about the cost of real estate. A smarter pool of buyers translates to heightened scrutiny of the pricing and condition of properties.

With the growing popularity of television shows like those on HGTV as well as all the mind-blowing Pinterest ideas available at a purchaser’s fingertips, the knock-on effect of heightening buyer’s expectations are palpable.

As a result, vendors may have to take more the time to conduct market analysis, identifying the price at which similar properties have been sold for, and approach the pricing of their property in a manner that is more consistent with economic realities and not merely on the basis of zeal.

Vendors will also need to consider minor, and sometimes even major, improvements to their property in order to get an edge on similar properties.

On the other hand, buyers will need to approach their property hunt with realistic expectations as to what their budget affords them. They should also bear in mind that their personal tastes are not often readily available within their price bracket, but may just be a minor renovation away.

MID-RANGE TO HIGH END PROPERTIES

Mid-range property prices refer to anything in the “sweet spot” range of US$250,000 -US$600,000, whilst higher end property values refer to property costs of US$700,000 and up.

In the parishes of Kingston and St Andrew the most highly demanded properties in this price range are located in the Kingston 6 and Kingston 8 areas, respectively, and when priced well, these properties tend to move off the market quickly.

Demand for these properties trend toward apartments or townhouses rather than independent dwelling houses, as purchasers are inclined to favour the security and shared maintenance costs offered by apartments and townhouses rather than the larger land space afforded by independent dwelling houses.

On the other hand, on the higher end of the market there is a mixed demand for townhouses as well as independent dwelling houses, and with both, buyers are keen on buying property that comes with land space.

There still exists a demand for properties outside of the Kingston 6 and Kingston 8 areas, however, as some people, particularly families who have or are expecting to have children, yearn for the land space afforded outside of the more popular housing locations.

Vendors can expect purchasers in the mid-range price bracket to be more likely to buy a home using a combination of cash and mortgage due to cash flow considerations, though they may be well able to afford to buy the property by cash. Buyers may be well-minded to pay cash regardless of these considerations, however, as mortgage interest rates inevitably translate to a buyer paying well over the purchase price for property.

Buyers in the higher end of the market, on the other hand, have the financial flexibility to purchase a home by cash without such payments affecting their cash flow in any meaningful way. As such, purchasers in the higher price range often pay for properties in cash, opting away from the sometimes arduous task of attaining a mortgage.

That being said, however, there will be purchasers in this end of the market who, due to cash flow considerations and the cost of opportunity, may also opt to import some level of mortgage financing into their purchase.

LOW-END PROPERTY VALUES

Low-end property prices refer to property prices to the tune of US$110,000 and lower.

The driver in this end of the market is undoubtedly the National Housing Trust (NHT). As such, the appetite of purchasers for properties priced in this housing bracket is in direct correlation with the amounts for which (usually two) people are able to qualify for with the NHT.

The news that the NHT had increased the amounts persons may qualify for with regard to new developments therefore, equated to a direct stimulation of the market, and accordingly has affected property prices in this housing bracket.

Of interest is the fact that whilst the aim of the NHT’s increase in loan allowances is to allow buyers to be able to afford newly constructed homes at a higher pricing point, vendors’ expectations as to the amounts they can sell their homes for has increased in tandem with the increase in NHT allowances.

The effect of this is that the purchasers do not end up getting a great benefit, as vendors continue to move the goal post.

Again, vendors must be realistic with regard to pricing their properties. Yes, the demand for properties priced in this bracket is much higher than properties in higher price brackets, but if people cannot afford properties because vendors are increasing prices on homes which are not new construction and simply beyond a realistic value for the property — the property will not sell.

The harsh reality is that most people in this bracket are heavily dependent on the NHT, and if vendors continue to price the properties exorbitantly, vendors may move the property out of the price range of their intended target market altogether.

CAPITALISING ON THE MARKET

With the stimulation of the market and the strength and expansion of same, now is a good time for vendors to get in on this upward trend and capitalise on the rising demand for well-priced homes in an increasingly eager market.

Realistic pricing and a little TLC in upgrading key rooms in a property, such as the kitchen and bathrooms, where a greater return can be had on one’s investment, will equate to a faster sale and a much more pleasant experience for all the parties involved.

Both vendors and purchasers may be well-advised to seek out the assistance of a competent realtor. A competent realtor will play an integral role in aiding a vendor with ascertaining comparable market values as well as providing advice with regard to making repairs and improvements to a property.

Realtors will also assist purchasers with managing their expectations within a budget, and also open a purchaser’s eyes as to the potential in a property which may not easily be seen by the untrained eye.

IN OTHER WORDS: priced well, will sell!

Melanie J Orr is an Attorney-at-Law practising at WH&CO., Attorneys-at-Law, a boutique corporate law firm. She may be contacted at legal@mhcolegal.com