The Tribune

By ANNELIA NIXON

Tribune Business Reporter

anixon@tribunemedia.net

THE Government’s latest home ownership incentives may improve access to mortgages and reduce transaction costs for first-time buyers, but there is a consensus that The Bahamas’ affordability woes cannot be solved without a significant increase in housing supply.

During the Financial Voice forum on the 2026-2027 Budget, panellists welcomed expanded VAT relief and concessions for first-time homeowners but warned that tax incentives alone will not address the structural factors driving housing costs higher.

Kriston Moore, portfolio manager at CG Atlantic Pensions, said the Government’s expanded exemptions will provide some assistance but affordability challenges wil still be present.

“I think there are few things in the Budget that definitely help the housing issue that we have,” Mr Moore said. “But in terms of overall housing affordability, there’s two sides to it. There’s the access to the capital… and then also there’s an issue of supply and demand here. I believe the demand for affordable housing exceeds the supply.”

Mr Moore argued that The Bahamas’ dependence on imported building materials leaves construction costs vulnerable to global inflationary pressures, while many Bahamians remain heavily borrowed, limiting their ability to qualify for mortgages.

He suggested policymakers may need to embrace higher-density residential development as land constraints become more of a reality.

“At some point I think we have to accept that everyone may not end up in a single-family home as we would have historically been used to,” he said. “I think multi-family living is going to be probably more prominent going forward.”

Mr Moore also warned that housing affordability extends beyond purchase prices, pointing to rising insurance costs linked to hurricane risks and increasing reinsurance expenses.

“Not only might you be priced out of a home just at the sticker price, but maintaining the home and making sure that you’re guarding it with home insurance becomes a lot more challenging,” he said.

David Slatter, vice-president and head of investments at RF Group, said market forces continue to steer investment capital towards higher-return residential developments rather than affordable housing projects.

“I guess it’s a function of return on capital,” Mr Slatter said. “There’s still some demand for mid-level and upper-level multi-family properties. So you can see many condo projects going on. There’s still a lot of demand for capital to go into these higher-yielding investment opportunities.”

To improve affordability, Mr Slatter suggested The Bahamas should explore alternative construction methods and technologies that could reduce building costs and improve the economics of developing workforce housing.

“Maybe we need to look at new building techniques, new building technologies that are less expensive,” he said. “How can we bring down the cost of construction in The Bahamas?”

Despite those concerns, Mr Slatter said the Budget’s expansion of VAT relief for first-time home buyers should stimulate activity across the broader economy.

“The idea of VAT relief for first-time homeowners and extending that to not just single-person locations, but it could be multi-unit locations, that’s obviously stimulative,” he said. “That will allow more people to afford a home, and that should also boost mortgage lending, which feeds into the banking sector.”

The Government, meanwhile, acknowledges that housing affordability has become a complex national challenge shaped by foreign investment, second home ownership and the growth of the short-term vacation rental market.

Simon Wilson, the Ministry of Finance’s financial secretary, described the issue as a consequence, in part, of The Bahamas’ success in attracting foreign direct investment.

“To some extent we are a victim of our own success,” he said. Mr Wilson argued that demand from foreign buyers, vacation home owners and investors targeting short-term rentals has increased competition for housing stock that would otherwise serve middle income Bahamians.

To ease those pressures, Mr Wilson highlighted the Government’s decision to expand permanent residency pathways beyond real estate investment through the introduction of zero-coupon bond investments. He also called for a significant expansion of public housing initiatives across both New Providence and the Family Islands.

“We need a significant investment in public housing,” Mr Wilson said. “Not just in New Providence, but also the Family Islands.” He argued that another challenge is insufficient supply rather than pricing regulations.

“We have to create supply,” he said. “More supply would bring down the price of homes and make it more affordable.” Mr Wilson also pointed to the Government’s own housing-related costs, noting that the public sector spends around $20m annually renting accommodations for employees such as teachers, police officers, doctors and nurses, particularly in the Family Islands where rental costs can exceed $2,000 per month for a one-bedroom unit.

Beyond increasing supply, Mr Wilson said greater engagement with commercial banks will be necessary to rebuild confidence in mortgage lending following the financial crisis and housing market downturns of previous decades.

“All the exemptions, first-home exemptions, we go up to four units now, all those things that we do, which have great value, will still not move the needle,” he said. “We have to move the needle. Whether it be with an aggressive strategy, a multi-faceted strategy, but it has to be an aggressive strategy because it’s a crisis right now. To be frank, it’s a crisis.”