Pre-2010 we used to speculate on whether we were coming or going into recession, and amazingly some people were also in denial. It might be safe to say that the recession started around 2007 and since then a partial “recovery” started approx. five years later. However, real estate continues to struggle.
The halcyon years before 2007 brought prosperity for everyone associated with real estate and property development, but the sceptics or realists if you prefer, always claimed the bubble had to burst sometime. However, I doubt if we expected it to take another decade for improvement and with little prospect of a better picture. Property prices are locked more in expectation rather than realism. The prices need a level and it appears they are too high including land prices. But realistically, it doesn’t really matter until the banks, developers, investors and property owners come to the table. Unfortunately, the key players have been bitten with arrears, redundancy and debt, and they aren’t going to rush quickly.
Banks have tightened mortgage funds, and development finance is virtually impossible. Overseas investors are a trickle compared to ten years ago and only CIBC First Caribbean Bank has lasted the course with other lenders conspicuously absent offering finance. Domestic mortgage funding now involves a prolonged process over months, and of course, the legal costs to convey are prohibitive to many prospective buyers.
Unfortunately, property prices are stagnant, and unless they need to sell, many property owners are prepared to run the course in search of better times in the future. Surprisingly, interest rates are relatively low, but the Loan-to-Value (LTV) to finance makes it difficult to provide the equity without family support.
People still dream of owning their own homes, but because of high cost and uncertainty, this dream for many is not a reality. We have been weaned in the past to enjoy property investment as a solid investment, but the decline in recent times has tarnished the image.
Property prices can drop, much the same as other investments.
Real estate needs a much-needed boost for this economy. Tourism is a vital organ for the economy, but not at the cost to other industries. Construction, property development, home ownership and overseas hotel expansion must start to ignite a new wave of commercial enterprise. Unfortunately, the banks, credit unions and Government don’t appear to have the appetites to stimulate these limping industries. Home ownership, especially for first-time buyers, young and old, lacks any real enthusiasm. It is a sad reflection on the island’s progressive and robust approach before the Millennium. We have to ask where are the great leaders to steer better times?
Industry, and young people in particularly, should never be disillusioned with little or no prospect of better times.
This Government needs an urgent think-tank in the private industry to invigorate various sectors. And it should include improving roads, contrary to what the Prime Minister seems to believe. Also, the Finance Minister appears to be indifferent to top economists despite experts rating us as having the 3rd highest debt in the world. The Minister doesn’t agree, but whom do you believe?
The economy is reaching beyond, so if the Government isn’t up to the job then perhaps it is time to concede to the Opposition Leader. She certainly talks the talk!
Don’t wait until an election. Test the electorate.