While consumer confidence remained more favourable throughout 2016 than in any other year since 2001, pollster Don Anderson has expressed concerns about lower intentions among Jamaicans to own a home.
In the recently released survey of business and consumer confidence report published by the Jamaica Chamber of Commerce (JCC), the survey highlighted a decline in home and vehicle plans among Jamaicans for the fourth quarter ending December.
Vacation plans, however, remained unchanged from last quarter and at the most favourable level ever recorded.
Despite the decline in the intention to purchase homes and motor vehicles, the segment remained more favourable than a year ago.
The decline in purchase plans comes amidst lower confidence indexes experienced for the last two quarters of 2016. Consumer confidence remained stable at an index of 151.6 for the two quarters June to December 2016, but was lower than the index of 155.6 experienced over the quarter April to May.
Consumers also became slightly less optimistic about getting a job in the closing quarter of 2016.
“All the data certainly on the consumer side is strongly related and when you look at that reduction in purchase intention and we can see an overall slight fall-off in confidence by the consumer, it speaks to perhaps a little bit of shakiness as far as the consumer is concerned about what they are seeing,” Anderson reasoned.
“Over the last year consumers have held firm, the confidence level has been good and we don’t want to overplay that slight fall-off but it is something that we are saying just take a note of because, coupled with the reduction in buying intention amongst those two segments it is probably an indicator that consumers are beginning to feel a little bit wary about their expectations not being realised,” the managing director of Market Research Services cautioned.
The fourth-quarter summary report noted that home-buying plans fell to 12 per cent from last quarter’s 15 per cent; while vehicle-buying intentions among consumers fell to 20 per cent from last quarter’s 22 per cent.
Vacation intentions remained unchanged from the third quarter, expressed by 43 per cent, the highest level ever recorded. Despite the small declines, purchase plans remain a positive force towards growth.
According to data provided by the JCC, home-buying intentions peaked in 2006 to 19 per cent and experienced the steepest decline during 2013. Consumer optimism about purchasing motor vehicles was at its highest level in 2006 following a decline to 10 per cent in 2003.
Purchasing a home is a major milestone that tops many people’s lifetime to-do list. It is also one of the greatest stores of value for people. But while there has been a fall-off in the demand for mortgages among Jamaicans, industry trends are showing a significant increase in the demand for unsecured credit as well as increases in debt-service ratios.
“More and more financial institutions are now offering unsecured credit in smaller amounts, providing some cushion, but this is only reaching a specific group of people,” Anderson noted.
He added that plans are underway to conduct more extensive research on the trends of the construction industry.