The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Realtors yesterday backed the IMF’s call for the creation of a Bahamian real estate price index but warned it “will take a lot of work” to obtain the necessary information.

John Christie, HG Christie’s president, told Tribune Business that while the International Monetary Fund’s (IMF) idea had merit implementation would be tough due to the lack of computerised systems and the fact that the required data was scattered rather than located in one spot.

“We sort of have it with the Multiple Listing System (MLS); that’s the closest thing to it,” he said. “It would be a little harder than it would be in the US because all sales are negotiated differently; some are gross sales, some are net sales.

“Conveyances do not say the price, so it’s kind of hard as we don’t have all the details. We need a lot of updating of systems to make that happen. It’s [real estate price index] not a bad idea, but implementation of it would be hard.

“The US have a lot of information; huge systems. I think it could be a good point to go for, something to try and achieve as the country develops to get something in place. That would be good, but it will take a lot of work.”

The IMF’s main motivation for creating a real estate price index appears to be that it would enable Bahamian banks and other lenders to better price distressed properties in line with what the market is willing to pay, thereby allowing them to address their decade-long non-performing loan overhang more quickly and efficiently, and resume lending activities.

“Further progress in supervision of credit underwriting and timely resolution of non-performing loans (NPLs) remain key objectives,” the IMF said in a summary of its recent visit to Nassau for the annual Article IV consultation.

“A local real estate price index should be introduced to increase visibility into the residential housing market and improve NPL valuations. The credit bureau, once operational, should strengthen the quality and pace of credit activity and improve assessment of lending standards.”

A real estate price index would operate in similar fashion to The Bahamas’ existing consumer price index, measuring movements in property prices up and down, and giving all market players - buyers, sellers, realtors, attorneys, financiers and the government - increased transparency and a better idea of a particular property’s true worth according to data.

Currently, it can be argued that many appraisal values are subjective, with different appraisers giving different prices for the same real estate parcel or property. This has complicated lenders’ efforts to offload distressed properties, especially since prices have dropped compared to pre-recession values.

However, much of the information needed to compile a real estate price index is not readily available. Not all conveyances are lodged with the Registry of Records, and even then they do not contain prices. And not all properties are recorded for sale on the Bahamas Real Estate Association’s (BREA) MLS listing system.

Mario Carey, founder of Better Homes and Gardens Real Estate MCR Bahamas Group, yesterday told Tribune Business that it was possible to pull the information required for a real estate price index together from multiple sources such as the Department of Inland Revenue.

“I guess the index would be a useful tool if we can collect the data,” he told this newspaper. “I don’t think it would be difficult if we have a proper registry, but how are we going to acquire the data and who’s going to manage it? It shouldn’t be a government entity.”

Mr Carey suggested that attorneys be mandated to lodge all conveyances and purchase prices with an agency charged with establishing the real estate price index. “The lawyers touch every deal and they can be funnelled into a database,” he added.