Owning a home may be about to get harder
Me and the mates got to talking recently, Mr Editor, always a dangerous thing I know, and the topic was home ownership, in Bermuda mostly. We are agreed: it is more than just a worthwhile pursuit.
Owning your own home is something which all people should be encouraged to pursue, and it is something which we wish for all our children.
Home owners are also generally viewed as the bedrock of any community, the backbone of any stable society: the more of them, therefore the better.
So how easy is owning a piece of the rock? Not easy, for sure. In fact, there are those among us who believe the perennial struggle is about to get even a little harder.
I refer to the proposed changes to the Immigration and Protection Act which will permit PRCs to purchase up to two homes as well as lowering the ARV for purchases by non-Bermudians. The legislation has been approved by the Senate and comes up the Hill to the House when it resumes today.
We understand the goal — at least I think we do. The property market has been sagging. Values are reported to have fallen sharply over the last seven years. There is also an apparent glut of unsold condos. The objective is to trigger sales and in so doing help boost not only the property market specifically but the economy generally.
There’s the obvious work for real estate agents and lawyers but possibly for builders as well who may be called on to undertake renovations. There will also be a little lift for Government coffers with licence fees.
It’s the trickle down, trickle out theory, which isn’t really an economic theory, at least not a recognised one, but a hope. Fair enough, you might say. Bermuda could use another green shoot.
But there’s another side to what may happen here. Despite the cap on property which may be bought by non-Bermudians (it remains set at 2,500 acres for all of the Island: a per parish cap will be lifted), and the fact that we are talking about a fairly limited number of properties, the overall likely effect will also be to:
• Raise for sale property prices;
• Encourage Bermudians to sell;
• See more Bermudian renters than buyers.
This could well end up the long-term price for short-term gain. I expect that there are any number of young Bermudians, and maybe not so young, who are wondering just what will become of their aspirations to own their own home.
Their parents are probably wondering, too, when and if the other shoe will drop and some additional special programmes or policies will be unveiled to facilitate and stimulate greater home ownership.
They are voters and it is important, critical in fact, to be seen to be addressing their concerns and speaking to their aspirations.
I am not sure whether it was in this context that the Minister of Finance was speaking when he told us two Budgets ago that he was concerned about banks’ lending practices in Bermuda.
In fact, he thought those practices were at odds with Bermuda’s national interests: “ultra-easy money” had been made readily available when the economy was “red-hot”, followed “by debilitating, ultra-cautious lending during economic weakness”. His words, not mine.
The Finance Minister went further and expressed his unhappiness with this state of affairs (and vice versa as well?) and said he was going to have a word with the banks, presumably to get them to change their course.
“Forward momentum is much more difficult to achieve”, he said, “when such an important economic driver as the banking sector is pulling in the wrong direction.”
It was language (and a position) to which a lot of people could relate — and buy into. Some did. So did anything helpful come of that?
One final comment here: immigration policies and property combined are an emotive issue — the third rail of local politics, as they have accurately been described — which can quickly become the subject of divisive politics. We have seen how that plays out.
That alone would seem sufficient to underscore the need for a cross-party parliamentary committee to keep under constant review immigration practices and policies with a view to finding, where possible, community consensus.
That too, would be the mark of a mature and stable jurisdiction which could well lead to change that is viewed as a continuum rather than one of potential reversals upon a change in government — and in a pretty important area (immigration) that is vital to our future success.
Recent tourism figures have also been a talking point, Mr Editor. Total visitors down 5.3 per cent in the first quarter (air arrivals down 6.7 per cent) and the reasons given, less airlift, bad weather, cancelled flights, all sounded very familiar. New Tourism Authority or not, it seemed like, well, we’re Forward to the Past. Or no further ahead.
Okay, that’s not entirely true. There’s a new sheriff in town (most people are very much aware of that) and new directions are being pursued (so we are told). We recently heard about the greater buzz the BTA’s PR people are creating for us in various media: social media as well as the “old traditional”. This time it sounded like Back to the Future: a 21st century version of the Bermuda News Bureau (remember that arm of the Tourism Department?) getting us front and centre in a personal kind of way, and personality is what we have a lot of, I think.
But the silver lining I thought was the claim that while visitors numbers were down for the first quarter of the year their spending was up by $6.1 million. The BTA hasn’t exactly discovered plutonium (yes plutonium, not platinum) but this is the winning formula. We’ve never been in the numbers game — cannot be with 20 square miles arguably, even at the best of times — and the campaign has to be about getting more from less.
People need to hear more about how this was achieved (and calculated), and whether this can be sustained; improved upon even.
Let’s face it: excuses, explanations and exhortations only go so far, voters have been set up to expect results.