Prime Minister Dr. Hubert Minnis’ plan to make land in western New Providence “affordable” to young Bahamian professionals is commendable.
I wish, though, that Minnis would extend the time allotted to build the homes on the properties to five years, rather than just two years.
Asking young people to come up with $40,000 to $50,000 and then another $150,000-plus via bank loans to build in a two-year timeframe is placing too much of a financial burden on the very demographic Minnis is looking to assist in achieving their dream of home ownership.
In the event a young Bahamian invests $40,000 on a lot and falls onto hard times, not being able to construct a home in two years, would the state repossess his property? Under such a frightening situation, would the state then reimburse him his $40,000?
This entire initiative by the Minnis administration underscores the high cost of home ownership in New Providence, which is due to one major factor: with a population of over 270,000, New Providence is running out of space for further development.
In other words, supply and demand of real estate is the main driving factor behind the exorbitant cost of properties in the capital.
Notwithstanding the political rhetoric by politicians, home ownership in Nassau is cost-prohibitive. This is a basic in economics.
When supplies of a certain commodity are scarce, the demand for the limited product goes through the roof, causing price inflation. It happens with OPEC and oil all the time.
New Providence is 80 square miles. A square mile is 640 acres. New Providence only has 51,200 acres — 83 of which have been allotted by Minnis for this housing development.
An acre is 43,560 square feet. Minnis’ proposal calls for the sale of 95 by 100 lots, which is 9,500 square feet or 0.218089908 acres per lot.
In the Family Islands, $50,000 could buy four plots of land, typically larger than the average plot of land in New Providence, for obvious reasons.
This can explain why the average mortgage rate in Nassau is $1,500 per month for small, low-cost homes.
In areas deemed safe, rental properties are averaging about $1,200 monthly, which is nearly $500 more than the average Family Island mortgage rate.
How can the government solve this problem? By wooing more investors, both foreign and domestic, to the Family Islands, with the aim of depopulating New Providence.
With a population nearing 300,000, the average Bahamian will never be able to own a home in the capital because of the scarce availability of land on an island that only has 80 square miles. But they can own a home in the Family Islands, where plots of land are going as low as $5,000.
Nassauvians can either stay renting for the rest of their lives or they can make the wise choice of relocating to the Family Islands, where home ownership is a reality.
— Kevin Evans