The Tribune

• 'Substantial' action needed to bridge demand gap

• Realtor: Five to seven buyers miss on multi-family

• Foreign buyers now exploring likes of Venice Bay

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Housing demand by Bahamians will exceed the supply of new homes for at least "the next five years", a realtor warned yesterday, thereby threatening to leave multiple families with "unfulfilled dreams" of ownership.

Matt Sweeting, chief executive at 1oak Bahamas, told Tribune Business that when he closes the sale of multi-family properties there are typically between five to seven rival purchasers who miss out even though they have submitted competitive bids that often exceed the seller's asking price.

Suggesting that this is a further sign of how housing demand continues to outpace available inventory, he forecast that this "disparity" will persist for much of the decade due to the ever-rising cost of construction that is making it increasingly harder for a growing number of Bahamians to find affordable housing and realise their ownership ambitions.

Mr Sweeting told this newspaper that "something substantial" is required to bridge the gap between housing demand and supply involving properties valued at $500,000 or less, which is the market segment traditionally populated by Bahamians.

Such action, he added, would likely have to come from the Government via either itself constructing more affordable housing or through private-public partnerships (PPPs) where it provided developers with sufficient tax breaks and other incentives to lower construction costs to a point where prices are affordable by more Bahamians.

Speaking to The Bahamas' housing challenges, Mr Sweeting said the excess demand will likely spill over into 2024 and maintain the robust post-COVID real estate market. "We're going to be going into 2024 with a lot of people having unfulfilled ambitions from 2023, meaning that they're still waiting for the right property," he told Tribune Business.

"For example, with a couple of multi-family properties that I sold in five to seven days, every time we sell those we're leaving five to seven people who are comparative bidders or above asking price on the market still looking. It's an indication there's not enough inventory coming on to the market to fill the need for residential and multi-family housing.

"It speaks to what 2024 will look like where we will have this tremendous demand for these multi-family and residential properties in this local market." Asked to quantify the gap between housing demand and supply, and by how much the former is outstripping the latter, Mr Sweeting replied: "I think it's unmeasurable.

"I cannot see.... because of the cost of construction, because of the supply chain issues we continue to face, I think we're going to see this disparity between supply and demand conservatively speaking for the next five years. There needs to be something substantial in the market, likely from a government perspective, that's going to address the cost of housing.

"When talking about the disparity with buyers in the under $500,000 range, unless the Government steps in and provides concessions to private developers, or does something themselves, I cannot see this disparity being bridged in the near future."

Asked what specific actions the Government can take, Mr Sweeting said: "All I can think is the Government needs to create some PPPs around providing concessions for developers doing developments in the under $500,000 range. It would create some easing in the cost of doing real estate business.

"It's so expensive to do real estate locally, not only from the real estate perspective but the construction perspective. Then, to add to it, the developer is carrying some cost in the construction as it relates to VAT. These things compound the cost to the developer, and make it very difficult for the developer to create inventory that fits the average Bahamian."

Owning 'a piece of the rock' is a long-standing dream that is both cherished and pursued by many Bahamians and their families. However, this ambition is seemingly being placed out of reach of a growing number of Bahamians as construction costs, and then house prices, continue to increase - especially on New Providence, where several observers believe there needs to be an increased emphasis on 'going vertical' as the supply of available land continues to reduce.

The Davis administration has sought to advance its low-cost housing initiatives via PPPs with several private lenders and developers, including the Pinecrest subdivision in southern New Providence in partnership with Arawak Homes. It also obtained a $20m facility from Jamaican finance house, Proven, which was arranged by Bahamas-based Simplified Lending, to fund the Renaissance at Carmichael subdivision where keys were recently handed over to the first group of owners.

The Government, via the Ministry of Transport and Housing, is also working on a 'rent-to-own' initiative. However, one option yet to be fully explored would involve the Government, as the country's largest landowner, identifying areas where housing is needed and then conveying suitable Crown Land tracts to private developers at below-market costs for conversion into affordable housing developments.

This would potentially unlock private capital, with developers able to set purchase prices that are affordable for Bahamians because their 'entry cost' - via the initial land acquisition - is low. The Government would be able to set terms and conditions that ensure the land is used for affordable housing development, and focus on its role as regulator to ensure Building Code compliance and that all applicable construction standards are met.

The Government, in recent Budgets, has also sought to offset rising construction costs by eliminating or reducing import tariff rates and VAT at the border. It has also sought to make home purchases by first-time buyers and others more affordable via a range of real property tax and other concessions.

Meanwhile Mario Carey, chairman and founder of Better Homes and Gardens MCR Bahamas, told Tribune Business yesterday that Bahamians must employ the correct financial savings and spending habits if they are to achieve their home ownership ambitions. This, he added, means avoiding taking on too much consumer debt and viewing entry to the housing market as their primary goal.

"We try and do so much to give Bahamians opportunities. There's only so much we can do," he argued. "Right now, borrowing money from the bank is very affordable. Bahamians need to think about investment, and remember the saying 'good real estate, cheap car'. Control your debt, control your credit card spending, control your lifestyle."

Mr Carey said the now-limited supply of available beachfront real estate in high-end communities such as Lyford Cay, Old Fort Bay and Albany, as well as the higher price points, meant international buyers were now looking at properties in communities such as Venice Bay that have traditionally been viewed as predominantly Bahamian.

"The primary demand is always beachfront. Demand for that far exceeds the limited supply, and prices for that continue to escalate," Mr Carey added. "People are going out as far as Love Beach. They're dealing with the flight path [for LPIA] just to be on the beach. It's not that much of a detriment. They just want to be on the beach.

"Coral Harbour beachfront is in high demand. We've noticed foreign buyers going into Venice Bay on Bacardi Road. It's affordable, on the water and where they can keep their boat. It's very real. Where can they go that's affordable? Why not in middle income neighbourhoods?"

Mr Carey said this trend was "pretty new", and had possibly started before COVID-19, but was now "increasing". He added that he was unaware of any opposition from locals, as international purchasers would only help to increase property prices, or of any concerns that it may price Bahamians out of the market.