The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A prominent developer yesterday warned “there is no one magic bullet” for resolving The Bahamas’ housing crisis as he urged market participants to “put everything on the table” in searching for a solution.

Franon Wilson, Arawak Homes’ president, told Tribune Business that addressing supply shortages and home ownership affordability woes is “not an overnight fix” and will require a concerted, multi-year effort by all industries and professions involved in the housing market before any reforms bear fruit.

Speaking after an International Monetary Fund (IMF) fund analysis suggested Bahamians are increasingly in danger of being priced out of the home ownership and rental market, with property prices and rental rates outpacing wage growth seven-fold during the decade to 2022, he argued that “a deep dive” into “each and every aspect” of the housing market is required to develop a sustainable solution that gets buy-in from all.

Emphasising that the Fund’s report had shown it was “not just one thing” behind escalating home ownership and rental costs, Mr Wilson told this newspaper that each market participant’s role - from the Government’s policy to banks and other mortgage lenders, developers, attorneys and contractors - must be fully examined to see where greater efficiencies and other improvements can be extracted.

“When we look at housing in The Bahamas, yes, we have to look at each and every aspect of the entire process, including all the biggest challenges we have in The Bahamas, such as land title that the Government is addressing through creating a Land Registry,” the Arawak Homes chief said.

“We need to look at everything, identify the challenges and really take a deep dive into it. It’s not one thing. It’s not just one thing only - the growth of Airbnbs and the property market - it’s not. There are a lot of things involved in getting people into homes, and we have to look at each and every aspect.

“There’s no one magic bullet. Literally, we have to go step by step. There’s no one magic thing to say that if we this, everything is going to happen. Everything has to be on the table, and really looking step by step and saying what role does this part play, and could anything be done with this part? It’s not a magic bullet and not an overnight fix.”

The IMF report confirmed that real estate-related costs are outstripping Bahamian earnings and incomes. While property and rental prices were said to have increased by 14 percent between 2012 and 2022, in contrast per capita wages in this country rose by just 2 percent.

“Though the population in The Bahamas has expanded swiftly since 2010, the stock and affordability of new housing has not kept pace due to limited wage growth and financing constraints,” the IMF said in its assessment of housing affordability in The Bahamas. “Limited growth in wages may have impacted housing affordability over the past decade.

“Between 2012 and 2022, the implied price of real estate, owner-occupied and actual rents activities increased by 14 percent compared to just 2 percent for employee compensation per capita. The effect is likely to have been the greatest among the most vulnerable, with 58 percent of the poor living in privately-rented housing that is subject to changes in annual rental rates, compared to 34 percent across the country.”

Housing affordability, and the ability of many Bahamians to realise their dream of home ownership, has been a growing concern for many years given the relatively low annual economic growth pre-COVID together with stagnant incomes and wages. Higher construction costs, difficulties in accessing mortgage financing, a reduced supply of land particularly in New Providence, and escalating prices have worsened these fears.

Keith Bell, minister of housing and urban renewal, told last year’s Exuma Business Outlook conference that The Bahamas is suffering from a “12,000-plus” shortage of units and even went so far as to suggest “there’s no such thing as affordable housing” in present market conditions.

In response, Mr Wilson yesterday said he saw no reason to disagree with Mr Bell’s figures. “I know the minister of housing has gone on record as saying there is a 12,000-plus unit shortage,” he added. “If the minister of housing said that I will be guided accordingly.”

He urged Bahamians to distinguish between “needs as opposed to wants” when it came to home ownership, and building their own properties, as a means to contain construction costs. “I’ll give you one example,” the Arawak Homes chief said. “The Water & Sewerage Corporation....

“If there is an area to be developed, and it doesn’t need sewers; there’s no reason for it, but the Water & Sewerage Corporation says you need a sewer there. A sewer system translates to $15,000 to $20,000 per house at the end of the day. That property could be $80,000 or $100,000 if the Water & Sewerage Corporation says you must have a sewer [system] there.

“That’s $15,000 to $20,000 more that you have to pay at the end of the day.” Mr Wilson cited this as an example of how a developer’s costs are increased and which, ultimately, are passed on to the home purchaser thus increasing costs and impacting affordability.

He reiterated his previous call to re-examine single family zoning restrictions in established communities, and relax these to permit landowners with sizeable lots to undertake multi-family developments, plus “increasing density” via condo and town home developments to overcome the increasing shortage of land in New Providence.

“If a property is big enough to build a duplex, if someone is able to add a unit on to their home that adds to the housing supply without having to find additional property and land,” Mr Wilson said. “There are ways in which we can do it. And increasing density, we see it happening around town now.

“There was a home on Eastern Road which was demolished and the owner is now building two town homes on the same property. They have room to add two or three more. They took what used to be a home, and could now possibly get four to five town homes on the same property. We have to be creative in terms of what we bring to the market and allow in the market. There is no one magic bullet.

“Some people may be uncomfortable about these changes,” Mr Wilson added. “When we talk about rezoning, there are some communities in Nassau zoned single family, and if someone applied for permission for multi-family units they would probably find out the hard way from a homeowners association or other residents that they are not welcome there.

“But, at the same time, you have a housing shortage and property big enough to build more than one unit.... We, as country, have to have some uncomfortable conversations for some to make the changes and made address the challenge. We need homes.”

Asserting that he “salutes the Government” for its reform initiative to switch to a system of registered land, a process that will take several years to accomplish by itself, Mr Wilson said it was “critical” for The Bahamas to resolve its housing challenges because “everything starts with a roof over someone’s head”.

“If the landlord says your rent is going up that has enormous implications because it means a larger percentage of a person’s salary is going to pay rent,” he added. “Everything else flows from that. They have to have a roof over their heads.

“It won’t be an overnight fix. Once we start to take steps like land registration to address long-standing issues we will be moving the pendulum in the right direction. Looking at it holistically is an opportunity for us all to look at what we can do to make it more efficient. It’s bigger than saying the Government must act. What can we do in the private sector to make it more efficient?”