SUPPLY chain disruption in the form of increased shipping costs and material pricing has impacted the pricing of houses and challenged the ability of the Housing Agency of Jamaica (HAJ) to maintain the housing unit prices at “tolerable” levels, reports Patrick Thelwell, CEO of the government body mandated to provide low-cost housing solutions.

The land and housing development company that provides shelter solutions for Jamaicans islandwide is wholly owned by the Government of Jamaica.

Thelwell reported, “From the start of April 2020 through April 2021, lumber prices jumped 375 per cent. These changes, amongst other material cost increases, inevitably impact the local production cost of housing units.”

A further constraint on market activity has been the increase in cost of living and decrease in disposable income due to COVID-19 which has worked to reduce consumer buying power.

The CEO said to mitigate these increases the agency has attempted to absorb increased costs and upwardly adjust the prices of housing units, only if absolutely necessary.

Studios and one bedrooms fielded in Catherine Estates in Bernard Lodge, St Catherine, in 2021, built with land for expansion, were cited at sales cost between $6 million and $7 million at the planning stage.

However, reliable sources have shared valuations for the units which significantly exceed the asking price. The studio has been valued at $9 million, while the one-bedroom homes have been valued at $10.5 million.

Thelwell told the Jamaica Observer that a sustained surge in demand for shipping containers from East-Asia combined with no slack capacity in container ships has sharply increased shipping costs.

The CEO noted, “Although this recent surge in shipping costs appears to be more due to strong demand for traded goods than to supply constraints, operational disruptions, including pandemic-related shutdowns of major ports as well as other disruptions have put logistic systems under further stress and increased trade and shipping costs.”

Companies, which rely heavily on imported materials for the construction of housing solutions, were exposed to increased material costs. The HAJ was no different.

Altogether, there was a considerable increase in input costs for items such as lumber, cement and steel, over the last year. Thelwell stated that, despite the labour price increase and access to construction materials, the agency has managed to make significant construction progress, as seen in three developments completed during the year.

The three developments were at Mona, St. Andrew (51 lots); Rhyne Park, St James (772 housing units); and Catherine Estate, St Catherine (1,650 housing units).

Catherine Estates, projected to cost $9.5 billion, offers what HAJ describes as “an integrated, sustainable community.” Lot sizes range from 223 square metres (2,400 sq ft) to 260 square metres (2,800 sq ft), each housing unit will be configured for easy upward and outward expansion.

The HAJ, during the year ended, also issued 415 land titles. The agency has also been collecting psycho-social data, where possible, on the households being served in order to better understand the communities served and improve the assistance to families.

Projections for new fiscal year

Projections for housing starts in 2022/2023 include six schemes across the island. These include Grange Pen in St James which is projected for 1,500 units, Alexandria, St in Ann for 116 units and 600 units are projected for Clarks Town in Trelawny.

Other planned projects are 109 units for Greenpond Phase Two in St James, 72 units for 81 Bayfarm Road in St Andrew and 38 units for Penwood Road in St Andrew. None of these units has been priced so far.

Upcoming amnesty

Thelwell indicates that, to further the effort in distributing land titles, for the upcoming fiscal year, the HAJ in collaboration with the National Land Agency (Ministry of Economic Growth and Job Creation) will be introducing a Land Titling Blitz Pilot Programme which will reduce lot prices for targeted communities for a limited time.

After this “amnesty”, HAJ indicates prices will be increased and residents will be supported in engaging a local lender if payment is not received.

The difference in this approach, it is outlined, is that if beneficiaries do not complete the process for the acquisition of the land within a given time frame, tactics will be employed to ensure that the issuance of titles is accomplished.

Also, if the agency is unable to locate the original assignees of the lot or arrangements are not made to finalise payments for associated lots, properties will be sold.

“This initiative will require the support of all stakeholders in order to get titles into the hands of our constituents. It is expected that the effort will distribute approximately 3,500 titles within the first year, if there is traction,” the HAJ adds.

Infrastructure upgrades

In addition to the land titling needs, there are 80 brownfield communities (informal settlements) for which the agency has responsibility. Within these communities, there are significant infrastructure deficits.

That is, there are no roads, water, electricity or sewage or if any of these facilities are present, they are dilapidated.

Thelwell indicates that works in some communities were started under the now defunct Operation P R I D E, they were never completed due to immense financial constraints.

He outlined, “The HAJ consistently receives damaging complaints regarding this matter; but the agency is unable to address any infrastructure works with the appropriate funding. Currently, the agency has estimated that the infrastructure cost for all communities served by the HAJ is $65.9 billion.”

He said that during the course of the upcoming fiscal year, efforts will be made to solicit funding to strategically address the infrastructure needs within these communities.