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Many prospective homeowners have shown excitement over the recently announced increase in the National Housing Trust's loan amount to $7.5 million.
However, constructing a habitable home with this sum will be quite a challenging task, some experts say.
The NHT will lend up to $8.5 million to contributors to purchase homes but with market prices of cement, steel, sand and other building material seeing near two-fold increases in some instances, especially since the pandemic, persons who wish to construct a home may have to seek additional funds, the experts told Loop News.
The situation is even more concerning if one has to also consider buying the land from the $7.5 million with prices for house lots in many areas across the island now averaging $2.5 million to $3 million.
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Based on the current market costs, Carvel Stewart, president of the Incorporated Masterbuilders Association of Jamaica, said "It would be very difficult to achieve that (building) with that amount of money.”
“It would be a significantly small unit and one would have to assume that you already have the land and you would be able to deal with whatever infrastructure is required on the land,” Stewart told Loop News in response to whether an individual would be able to build a home for $7.5 million.
“You could get something in the order of about 400 to 500 square feet now for that kind of money…maybe for a studio,” he said adding building a one- or two-bedroom home, “would be tight.”
“With what I’ve seen lately, you couldn’t buy a studio with that but I suppose you could build one if you found the right builder and nexus,” he said noting the current market costs of upwards of $18 Million for studios.
For one Kington-based building contractor, considering the attendant fees, Stewart's reasoning is not far off.
For him, after buying a house lot for $3.5 million (the current amount offered by the NHT) one would only end up with a 375-square-foot dwelling using the remaining $4 million.
“That can give you a place that is 15 feet by 25 feet with the remaining funds going purely to construction,” he said.
“If you (already) have the land, $7.5 million can build you something very cheap, maybe a 600 square feet house,” he said.
He advised prospective homeowners to also remember that “even when you borrow NHT money, you still have to inject some of your capital into the project plus you will need all the approvals which are additional costs.”
Of note, anyone who has constructed a home using an NHT loan also knows that material and labour costs have to be skillfully navigated to ensure completion of the various stages of construction in order to access the disbursement tranches from the trust.
A cursory survey of building material prices will also show near two-fold increases in some cases.
For instance, a tonne of steel which sold for approximately $90,000 to $95,000 pre-pandemic is now roughly $170,000 to $180,000 depending on whether one is shopping in the rural or urban areas.
In addition, with a load of sand – roughly 35 tonnes - costing $145,000; cement - $1,200 per bag and 1,000 blocks at $13,000, there is a lot for the prospective homeowner to consider.
For the proprietor of BiWay Hardware in Manchester, Luther Shanty, 60 per cent of that $7.5 million loan amount will go to material costs. He also agrees that for land owners, $7.5 million will likely only build a one-bedroom home.
One NHT contributor with whom Loop News spokeand who asked not to be named, describes the increase as “woefully inadequate.”
With his home now under construction, he too reckons that the current NHT loan amount may only be able to build “a proper studio unit.”
The call for the NHT to keep pace with housing demands as well as increase its loan amount was echoed by all.
“The NHT really needs to provide more funding to the people…the financing should be available for them to buy a house of some reasonable size,” Stewart said.
In noting the increasing trend of young people joining together to purchase a home, the building contractor also pointed to the need for more affordable housing options.
Many prospective homeowners have shown excitement over the recently announced increase in the National Housing Trust's loan amount to $7.5 million.
However, constructing a habitable home with this sum will be quite a challenging task, some experts say.
The NHT will lend up to $8.5 million to contributors to purchase homes but with market prices of cement, steel, sand and other building material seeing near two-fold increases in some instances, especially since the pandemic, persons who wish to construct a home may have to seek additional funds, the experts told Loop News.
The situation is even more concerning if one has to also consider buying the land from the $7.5 million with prices for house lots in many areas across the island now averaging $2.5 million to $3 million.
Related Article
(Photo: iStock)
Jamaica News
NHT increases loan amount for contributors
July 1, 2023 03:28 PM ET
Based on the current market costs, Carvel Stewart, president of the Incorporated Masterbuilders Association of Jamaica, said "It would be very difficult to achieve that (building) with that amount of money.”
“It would be a significantly small unit and one would have to assume that you already have the land and you would be able to deal with whatever infrastructure is required on the land,” Stewart told Loop News in response to whether an individual would be able to build a home for $7.5 million.
“You could get something in the order of about 400 to 500 square feet now for that kind of money…maybe for a studio,” he said adding building a one- or two-bedroom home, “would be tight.”
“With what I’ve seen lately, you couldn’t buy a studio with that but I suppose you could build one if you found the right builder and nexus,” he said noting the current market costs of upwards of $18 Million for studios.
For one Kington-based building contractor, considering the attendant fees, Stewart's reasoning is not far off.
For him, after buying a house lot for $3.5 million (the current amount offered by the NHT) one would only end up with a 375-square-foot dwelling using the remaining $4 million.
“That can give you a place that is 15 feet by 25 feet with the remaining funds going purely to construction,” he said.
“If you (already) have the land, $7.5 million can build you something very cheap, maybe a 600 square feet house,” he said.
He advised prospective homeowners to also remember that “even when you borrow NHT money, you still have to inject some of your capital into the project plus you will need all the approvals which are additional costs.”
Of note, anyone who has constructed a home using an NHT loan also knows that material and labour costs have to be skillfully navigated to ensure completion of the various stages of construction in order to access the disbursement tranches from the trust.
A cursory survey of building material prices will also show near two-fold increases in some cases.
For instance, a tonne of steel which sold for approximately $90,000 to $95,000 pre-pandemic is now roughly $170,000 to $180,000 depending on whether one is shopping in the rural or urban areas.
In addition, with a load of sand – roughly 35 tonnes - costing $145,000; cement - $1,200 per bag and 1,000 blocks at $13,000, there is a lot for the prospective homeowner to consider.
For the proprietor of BiWay Hardware in Manchester, Luther Shanty, 60 per cent of that $7.5 million loan amount will go to material costs. He also agrees that for land owners, $7.5 million will likely only build a one-bedroom home.
One NHT contributor with whom Loop News spokeand who asked not to be named, describes the increase as “woefully inadequate.”
With his home now under construction, he too reckons that the current NHT loan amount may only be able to build “a proper studio unit.”
The call for the NHT to keep pace with housing demands as well as increase its loan amount was echoed by all.
“The NHT really needs to provide more funding to the people…the financing should be available for them to buy a house of some reasonable size,” Stewart said.
In noting the increasing trend of young people joining together to purchase a home, the building contractor also pointed to the need for more affordable housing options.