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Apartments made the best gains in value, new report shows

In a three-year review of the mortgage market, the Bank of Jamaica found that apartments made the best gains in value, while houses built on land lots showed least improvement.

The central bank also found in its assessment of loan-to-value ratios in the mortgage market, done for years 2019 for 2021, that property values in western Jamaica improved by more than 60 per cent.

The findings were part of a special review published in the latest BOJ Financial Stability Report released in April, which placed the value of outstanding mortgages at $121.8 billion among the lending institutions it regulates.

On average, the central bank said, properties in St Andrew, St Ann and St James were valued between $17.5 million and $25 million, with similarly valued but less demanded properties found in St Mary, Portland and Manchester.

There were sharp increases in the average property value the parishes of Westmoreland, St James, Portland, St Mary, and Hanover. In 2021, residential property prices in these parishes reflected average growth of 62 per cent.

On the other hand, over the same period, the growth in property values in St Thomas and St Catherine were benign.

The BOJ notes that the larger share and volume of mortgages from banking institutions were issued for the purchase of houses, houses followed by apartments, both of which showed an increasing trend over the review period.

Among varying property types, the average price for houses was among the lowest.

Additionally, excluding undeveloped lots which reflected fairly stable property values, house prices reflected the lowest rate of growth over the three-year period.

Conversely, the BOJ indicated, the average value of town houses and apartments mainly located within the twin parishes of Kingston and St Andrew, reflected notable price appreciation, particularly during 2021.

Over the three years, which the central bank was characterised by greater financing offered by lenders “amidst the competitive mortgage market, the average value of town houses rose by 52.4 per cent to $34.6 million in 2021; while the average value of apartments appreciated by 28.7 per cent to $26 million.

Total property values of residential real estate financed by banking institutions over the period also rose to $105.2 billion, reflecting annual growth of 45.1 per cent and 29.2 per cent during the 2021 and 2020 periods, respectively.

A total of $159.9 billion in mortgages disbursed during the three-year period, $121.8 billion was outstanding at March 2022.

The demand for financing for apartments rose to $15.4 billion in 2021, compared to $9.2 billion in 2020; for scheme units, the demand rose to $6.5 billion from $4.2 billion, commensurate with the supply of those property types to the market, the central bank reported.

Additionally, property values were highest in the more urban parishes – namely Kingston & St Andrew, St Catherine, St James and St Ann – which also saw the highest effective demand during the three-year period.