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80% can't afford NHT mortgage - <span style="font-weight: bold">But</span> agency doubles housing starts, spending record $22b this year
Published: Friday | April 17, 2009
Dionne Rose, Business Reporter
The National Housing Trust (NHT) is pouring substantially more billions into housing this year, using a portion of the investment to launch close to five thousand new housing starts in a bid to fill what is now seen as a void in the market as developers retreat in the face of economic uncertainty.
NHT boss Earl Samuels is unsure, however, just how many people will be in a position to buy the units, given the thousands of job cuts, salary adjustments and income erosion faced by Jamaicans.
Indeed, a new market survey by the Trust has found that as much <span style="font-weight: bold">as 80 per cent of NHT contributors cannot on current salaries afford its $3.5 million mortgage loans</span>, which are priced at two per cent to six per cent depending on income bracket.
Last year, the state agency spent $16.9 billion on housing, which it will cap by a near 30 per cent in this fiscal year ending March 2010, increasing the spend to $22 billion according to Samuels.
The investment represents a new record expenditure, which within NHT has decided to take on an even more ambitious agenda as private developments stall - 4,800 new starts for which he has budgeted $4.77 billion.
"We have revised our budget and we have increased the number of (housing) starts for 2009/2010. So, the fallout in the economy will not affect the number of housing starts," he said.
"This year we are hoping to start 4,800 new housing solutions across the island but mainly so in the tourism belt," he told the Financial Gleaner.
NHT is considered one of the richest government agencies with assets of $99 billion at March 2008, and a net worth of $59.6 billion, of which $15.6 billion is accumulated surplus.
The agency's website indicates that some of these projects include the construction of 780 one and two bedroom units and service lots in Manchester, slated to begin in November; the Longville phase three development in Clarendon comprising 800 two bedrooms, studio units and service lots for Clarendon, to get off the ground in August.
Low-income housing
Samuels
Samuels, however, noted that low-income housing is growing more expensive - standing at about $7 million on the open market - and that affordability by purchasers to buy these units have been of an issue of concern to the agency.
"What we will also be doing is looking at other strategies that can be used to increase affordability because that is the major challenge at this time," he said.
Samuels did not go into details, though he said discussions were underway on how to get around this issue, but the talks will likely centre on pricing and perhaps mortgage rates.
On pricing, the agency may well have room to manoeuvre.
The 4,800 units it plans to roll out this fiscal year will cost NHT just under $994,000 per unit, based on the budgeted expenditure quoted by Samuels, but it was not immediately clear whether more would be expended on these particular schemes in the next fiscal period.
The NHT's prices tend to be cheaper, for example, the agency is about to put on the market the Morris Meadow scheme in St Catherine, where the two-bedroom will sell for $5.6 million; last year, comparative NHT units in the same area sold for $4.6 million.
Indeed Samuels said the NHT was considering ways to build units even more cheaply, including issues relating to finishing on homes.
"We are also working with other agencies to see what are the minimum acceptable standards and various strategies," said the NHT managing director.
Meanwhile, Samuels also disclosed that over the next two years the NHT would also be building 1,000 units under its Urban Renewal Programme in Kingston and St Andrew and in Montego Bay.
That project has already developedunits in Kingston's downtown core.
That plan, he said, added to the other NHT's programmes - including open market purchases, build and own land, and NHT scheme developments - will see the agency investing a total of $70 billion over three years.
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