The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ housing inventory grew “1.5 times slower” over the 12 years to 2022 when compared to the previous decade, it has been revealed, with the decline blamed on a reduced pace of new-builds as well as more properties falling into disrepair and tenant-weary landlords.

The Inter-American Development Bank (IDB), in a just-released March 2026 study on home affordability and ownership in The Bahamas, disclosed that growth in this nation’s affordable housing stock fell by 8,571 units during the period between 2010 to 2022 when compared to the decade from 2000 to 2010.

It asserted that there are numerous factors behind the slowdown in the growth of available housing, including a fall-off in new construction but also an increasing number of properties falling into disrepair as more than 40 percent of The Bahamas’ existing housing inventory was built before 1990 more than 35 years ago. Compounding the effect of an aging housing inventory, residential mortgage commitments for repairs and additions to existing homes plunged by 14 percent over the decade to 2024.

And the IDB report also disclosed that “stubborn levels” of vacant properties are worsening The Bahamas’ housing availability and affordability woes. While there were more than 20,000 vacant properties in this nation in 2022, the multilateral lender sounded a mild positive by suggesting the issue is “not getting worse”, and attributed this problem to a combination of bank foreclosures, growth in Airbnb vacation rental-style homes, and fed-up landlords frustrated with delinquent tenants and reluctant to re-let.

The study also said much new construction data is not captured by the Central Bank’s building completion statistics, as these reflected just 7,208 residential completions over the 12-year period from 2010 to 2022 - a number representing just 41 percent of of what was recorded in the Bahamas National Statistical Institute’s (BNSI) 2022 housing.

It suggested that there is “a high degree of regulatory avoidance”, with persons adding units and other spaces on to their existing homes without obtaining building permits and/or in violation of zoning regulations. Bahamians are increasingly converting parts of their homes and residential properties into rental units, such as efficiencies, and using tenant lease payments to cover the mortgage and other daily living costs.

Housing affordability and availability were two central issues during the general election campaign with both major political parties pledging to make increased use of private sector developers and capital to build more homes. Keith Bell, minister of housing and land reform, said in 2024 that The Bahamas was suffering from a shortage of some 12,000 housing units.

“The housing stock grew much more slowly in the last decade compared to the previous one,” the IDB study asserted. “Nationally, the number of dwellings increased by 17,705 units or an average of 1.2 percent per year between 2010 and 2022, while the population increased by an average of 1.1 percent per year.

“This contrasts to the 2000-2010 period when, with a higher population growth of 1.6 percent per year, the housing stock grew more than twice as fast at 2.6 percent per year, representing an additional 26,276 dwelling units. When controlling for the slower population growth in the last decade, housing stock growth was still 1.5 times slower than in the previous one.

“While the recent slowing in the growth of the housing stock is likely largely explained by reduced formal production, attrition is also likely part of the explanation, with some dwellings which were part of the stock in 2010 falling into such disrepair that they were no longer habitable and were probably demolished.”

The report, entitled ‘Unpacking housing affordability in The Bahamas, added: “Attrition is associated with dwelling condition, for which dwelling age can be used as a proxy. The median dwelling age in 2022 was more than 35 years, and the distribution is skewed… with over 40 percent of the stock having been built before 1990.

“In the absence of substantial maintenance and repair activity, this latter category is likely to account for a significant part of the attrition. If new production continues to decline, then the stock age distribution will increasingly skew older with a higher propensity for attrition.” Just 25-30 percent of The Bahamas’ existing housing inventory was built this century, the report added, drawing on BNSI data to help support its conclusion.

It added that the use of less-resilient construction material has also contributed to older properties increasingly falling into disrepair, and said: “Using construction materials as another proxy of dwelling condition, in 2013 approximately 30 percent of dwellings, 32,000 homes, had outer walls made of less durable materials than concrete blocks/ slabs - the most durable option. These are another likely source of the attrition in dwellings between 2010 and 2022.

“One mechanism for extending the life of the existing housing stock is through repairs and rehabilitation investments. However, residential mortgage commitments for rehabilitation and additions declined steadily between the highs of 2016-2017 and 2022. Even after a notable rebound since 2022, the decline was 14 percent between 2015 and 2024.

“While absolute numbers of such loans were low, if this decline is indicative of a broader decline in such lending from other non-mortgage sources from a wider range of financial intermediaries, including co-operatives, then its impact on the housing stock quality would have been significant.”

The IDB study said the overhang of vacant or empty residential housing units, including properties that have been repossessed or foreclosed on by lenders, represents another affordable housing supply bottleneck even though their numbers grew at a slower pace than overall inventories. “In addition to diminishing production and stock attrition, housing supply is also constrained by stubborn levels of stock vacancy,” the report added.

“Vacant units stood at over 20,000 in 2022. However, the vacancy problem is not getting worse. It grew by 6 percent between 2010 and 2022, whereas the overall stock grew by 14 percent. The most rapid growth was during the 2000- 2010 period, coinciding with the financial crisis.

“Vacant stock is likely a combination of foreclosed homes held by banks after the financial crisis, vacation homes and reluctant landlords weary of the difficulty of recovering their rental units from a delinquent tenant.”

The report also conceded that home construction and related-activity was also likely under-estimated as persons added rental units as a “a counter to otherwise unaffordable formal housing solutions”.

“Similar trends were recently observed in a study of Trinidad and Tobago and Barbados, where it was found that during a decade of relatively slow economic and population growth, 2014-2023, both countries experienced significant dynamism in their housing stock that was mostly not attributable to formal production by state actors or private sector developer firms,” the IDB said.

“That study also found marked discrepancies between the volume and location of housing stock changes and the volume and location of applications for planning permission, implying a high degree of regulatory avoidance with potentially adverse implications for housing stock resilience.

“The prominence of owner-driven production without full regulatory oversight could therefore also be a contributing factor to the earlier noted stock attrition and associated shorter life spans of homes in the existing stock.” Multi-family households in The Bahamas are growing in number, the IDB said, suggesting that this is driven at least in part by housing affordability issues and represents “a coping mechanism”.

“In 2022, there were 4,029 more households with five or more persons compared to 2010 - 27,628 versus 23,599 - although the share of such larger households remained constant around 23 percent,” the report said.

“The household size brackets that increased the most during this period were nine and eight, which grew by 84 percent and 53 percent, respectively. Meanwhile, the number of three and four-person households decreased, and the number of two-person households increased.

“The decline of mid-sized households and the growth in large-sized households could reflect a pattern of house-sharing as a coping mechanism for housing affordability. The decline of mid-sized households and the growth in small-sized households could also be related to lower fertility, second home ownership and Airbnbs.”

Such housing trends have come to the Government’s attention. Noting that many Bahamian home owners are leasing part of their properties to tenants so as to derive rental income to finance mortgage payments, Michael Halkitis, minister of finance, in last week’s 2026-2027 Budget unveiled the expansion of the first-time home buyer VAT exemption - which eliminates the tax paid by the purchaser on the acquisition - to multi-unit complexes.

“We are therefore extending VAT relief for first-time homeowners by expanding zero-rated treatment to include multi-unit properties such as fourplexes, triplexes and duplexes, particularly where at least one unit is owner-occupied. To clarify, this VAT relief will be on the entire building rather than just the proportion where the first-time homeowner resides,” Mr Halkitis said.

“This reform reduces the upfront cost of home ownership, supports small-scale investment and rental income, and reflects how Bahamians are increasingly entering the housing market today. This measure takes immediate effect, helping more Bahamians to own property, build equity and generate income.”

The IDB report, detailing the current obstacles to Bahamian home ownership, described these as “less stock to choose from because production is declining, existing stock is subject to attrition, and vacant units are not meaningfully making their way back into the active stock”.

It added: “Longer commutes are now a feature because development is becoming more dispersed in New Providence. And access to mortgage financing is becoming harder because of fewer mortgages, higher deposits and greater selectivity by banks.

“In response, it appears that there is now a greater likelihood of households trying to solve the problem on their own by either doubling up at their parents’ home or building on their own, neither adequately supported by regulation. These findings suggest that policy and public programming changes are needed to augment housing production, stem stock attrition and improve affordability.

“Reforming the legal framework to better facilitate mixed-use development, multi-family housing and urban regeneration could encourage well-planned densification of existing built-up areas through in-fill development, harnessing the capacity of existing infrastructure and the concentration of economic activity in Nassau,” the IDB paper continued.

“Expanding the availability of concessional financing for home maintenance and repair would likely lead to investments that would prolong the life of the existing stock, especially if it is targeted to lower income households who otherwise could not afford to make those investments. At scale, and alongside ongoing efforts to reform Rent Control provisions, these could have a price moderating effect by reducing the gap between the demand for new home solutions and supply.”