NASSAU, BAHAMAS- The Bahamian construction industry’s residential housing sector continues to face significant challenges, with skyrocketing home prices—over $300,000 for single-family homes and more than $550,000 for townhomes—putting homeownership out of reach for many Bahamians. This has left contractors with limited opportunities for growth, as demand for affordable housing remains high but financing options are scarce, according to Leonard Sands, President of the Bahamian Contractors Association.
Sands told Eyewitness News: “The problem is that the marketplace still hasn’t adapted to the crunching capital market, along with the high criteria for loan qualifications. This remains a major issue. What that results in is a reduction in the number of construction companies able to secure work because their clients can’t qualify for financing. On average today, a single-family home costs at least $300,000. And if you’re looking for a townhome or something you could potentially rent out, that price goes up to over $550,000.”
Sands further explained: “This pricing puts homeownership completely out of reach for a large portion of the population. People can’t afford to finance even a simple apartment complex, like a two-plex that could fetch $2,000 a month or more. We’re in a very tricky situation: there isn’t enough land to meet the demand for single-family homes, and the available financing options are limited.”
He also pointed out that about 12,000 single-family homes are needed across the country—not just in Nassau. However, Sands noted that the types of homes Bahamians are looking for often exceed what is affordable: “What people want is a nice three- or four-bedroom home, around 2,500 square feet, maybe with a garage and fully landscaped. But those homes are going to cost well over $400,000. The market is telling us that’s what people want, but they simply can’t afford it.”
Sands explained that the market for duplex homes is largely saturated, with people now turning to other options like duplex townhouses or small condo developments with a maximum of four units. However, even these options are becoming difficult for buyers to afford, leaving contractors with limited work opportunities.
Sands added that while money is being made in the construction sector, contractors are struggling to find profitable work. Profit margins are tight, and contractors face a tough decision: either work on large, high-end developments with limited availability or compete for smaller projects, like single-family homes, where the competition is fierce and the profits are slim. To make matters worse, many of these smaller homes are being sold to buyers who can barely qualify for financing, further reducing contractors’ earning potential.
Housing Minister Keith Bell acknowledged the challenges of providing affordable housing in the country during his remarks at the Exuma Business Outlook last October. He noted that the government “has its work cut out” in addressing a shortage of over 12,000 housing units. Bell also mentioned that “low-cost housing” is no longer realistic, especially in New Providence.
The International Monetary Fund (IMF) has identified a growing housing affordability crisis in the Bahamas, with wages failing to keep pace with rising real estate prices and rents. Between 2012 and 2022, rents surged by 14 percent, while average wages only increased by 2 percent, putting immense strain on low-income households.
In its Selected Issues paper on the Bahamas released in January, the IMF highlighted that while short-term rentals have boosted the tourism sector, they have also exacerbated the housing affordability issue. Despite government efforts, the IMF argues that more robust actions are needed to make affordable housing accessible for all citizens. The IMF recommends increasing both public and private investment in affordable housing, regulating the short-term rental market to prevent it from crowding out long-term housing, and improving access to credit for potential homeowners to address the growing demand and limited supply.
