Townhouses were a better investment than apartments and regular houses in Jamaica between 2019 and 2021.  Prices for townhouses went up by 52%! 

So the Bank of Jamaica recently released its financial stability report and it had some interesting stats.

One of the things that stood out to me most, is that townhouses and apartments were gaining value faster than regular houses.

The BOJ’s report compared property values from 2019 to 2021.

According to the report, the value of townhouses climbed 52% to an average of $34.6 million, while the value of apartments went up by 29% to an average of $26 million.

That means if you brought a townhouse for $20 million in 2019, it was worth over $30 million just two years later, in 2021.  That’s massive!

Remember that we’re talking about appreciation, or the growth rate, in property values. 

Regular lot houses are still expensive, in many cases more expensive than townhomes or apartments.  But their values aren’t going up as fast as the latter two.

Now the report noted that this massive jump in price was mainly in the corporate area – Kingston and St Andrew.

And that tracks because the BOJ also said that all property values were highest in the more urban parishes- Kingston and St Andrew, St Catherine, St James, and St Ann. Those parishes also had the highest demand during the three-year period. 

And that last point is why I think apartment and townhouse values went up so much. The demand. 

We always talk about supply and demand here. When the supply is small and the demand is great, prices go up. 

There has definitely been more demand for apartments over the last couple of years. And that could be for some of these reasons:

One, short-term rentals are becoming more popular. So a lot of people like to buy apartments and rent them out through Airbnb or similar apps. We talked recently about how local Airbnbs were at max capacity for Carnival weekend. Tourists sometimes opt for the more relaxed vibe of an Airbnb.

Two – more long term rentals. Jamaica’s unemployment rate is at a record low of 6%, so it stands to reason that more people may be able to live on their own now. So there would be an increase for apartments for that reason.

And I’m not just pulling this claim out of thin air.  The same BOJ report noted an uptick in purchases of rental properties in 2021. 

And even though it seems like there’s an apartment complex going up every week, there’s always a lag between building and availability because of construction.

So high demand and low supply equal a higher value on existing units.

The BOJ also noted that during 2021, demand for loans to buy apartments went up 21% to about $15 billion, compared to $9 billion in 2020. 

And of course that makes sense, since the price of the apartments went up, people had to borrow more to afford the units.

There are some other interesting tidbits from the report that I’ll be covering in another video so look out for that. In the meantime, are you shocked by the BOJ’s findings? Why or why not?