The Editor, Sir:
I noted with interest the Letter of the Day of May 15, regarding a stimulus package for the real estate industry. The Realtors Association of Jamaica (RAJ) has a point - the Government should reduce taxes on real-estate transactions sooner than January 2010 to assist the ailing sector. But the RAJ must also acknowledge that effective stimulation of the industry, in the circumstances, will result mainly from the efforts of key industry players, not the Government.
High-priced properties
The crux of the matter is that vendors and developers must reduce their asking prices to reflect current market and economic conditions. Property prices are unjustifiably high with no meaningful reduction in recent times - much to the frustration of purchasers. The fact that many properties are still being priced in US dollars is indicative of a disconnect with the current state of affairs. I don't agree with the RAJ that there are 'great deals' to be had in the market now, certainly not within the context of the global real-estate meltdown, and given that the Jamaican real-estate market is due a correction. Further, the quality of the properties offered for sale must be considerably improved as investors want value for money.
Reduction in professional fees
It can hardly be avoided - realtors and lawyers must get creative and reduce their fees. To put it in proper context, the standard fees of five per cent of the sale price, plus GCT, for realtors, and three per cent of the sale price, plus GCT, for lawyers make most real estate transactions nearly 10 per cent more costly, which is typically added back to the sale price and thus passed on to the purchaser. Although some realtors and lawyers have reduced their fees in recent times, a reduction in benchmark professional fees will support the ultimate goal of increased real-estate transactions and greater prospects for more Jamaicans to own property.
Limited access to financing
A major challenge for the industry now is access to financing, as mortgage institutions are understandably more risk averse and have noticeably shifted their strategy from loan sales to savings products. In just a year, average mortgage rates have increased sharply - benchmark interest rates must decline significantly for mortgage loans to be attractive and affordable.
Additionally, industry insiders will agree that qualifying for a mortgage is considerably harder today than it was a year ago. Mortgage risk managers are now diligently analysing sustainable income sources of prospective
It is important to note, however, that the current global crisis will impose long-term
I am etc.,
Yaneek Page
Kingston 10