Dear Editor

I READ with interest an unsigned article in the media that argues home ownership in Guyana is a pipe-dream.
The missive took on a retaliatory tone against Minister Susan Rodrigues (Housing and Water) who provided an update on the Young Professional homes being built at LBI.
The complainant also stated that many projects that were announced have not been completed. While the letter in question does express some legitimate concerns, it could have been more cautious with its general claims. Consider the points below:

For the sake of clarity let us begin with a specific point made by the complainant. They argue that a house in Kingston sells for about $95,000,000 (GY ninety-five million), and given the wage level in Guyana, no worker could afford to buy a house in that lovely part of Georgetown.
To add a populist slant to the claim, the letter writer wants to know “how on earth can a teacher afford that?” Well, it is absurd for a teacher to want to buy a house for GY$95 million.
If fact, I bet no teacher in their right mind would be thinking that they may want to buy a house for that price, the same way a teacher in Washington DC cannot think she may want to buy a house in McLean, Virginia, or Potomac, Maryland.

Unlike the letter writer, most consumers are quite rational when it comes to buying a house. People must afford what they want to buy.
Allow me to provide a lesson to the letter writer regarding populism and housing. This will take us back to President Bill Clinton who, for good reasons, wanted to boost home ownership. But there were also a good dose of politics involved.

Clinton pushed aggressively to lower down payments, and to ease the market conditions for mortgages.
The toxic, sub-prime mortgage market emerged, and with the removal of Glass-Steagall in 1999, a free-for all broke out. Sub-prime mortgages were securitised, bundled, and sold off to investors, many of whom did not know the extent of the risks. President George W. Bush continued with the same policies.
Sub-prime mortgages were targeted to those who could not otherwise obtain a mortgage, and amounted to hot-money speculation facilitated by politicians who wanted to administer home ownership through economic populism.

It eventually caused the US economy to crash, and many of the poor who were sold debt (mortgages) they could not have otherwise obtained, were forced into bankruptcy.
No bank should provide a mortgage to a teacher to buy a house for GY$95 million, unless the teacher has another source of income to comfortably meet the monthly payments. Buy what you can afford.

President Ali’s administration has committed to housing to the tune of 50,000 through a combination of house lots, Young Professional Homes, and other targeted categories. The investments are huge and will yield real value for people all across this country.

It costs GY$3 million to develop a house lot. The government aggressively subsidises these house lots, and further, it also has strong levelling mechanisms in the housing policy. High income lots are sold for as high a GY$2.3 million; low income lots are subsidised by up to 90 per cent of the real cost.
Let us look at affordability. Two teachers making GY$80,000 each can afford a house for GY$9,000,000. From their combined income of GY$180,000, they will pay GY$41,000 in monthly mortgage, or about 25 per cent of their salary.

This assumes a rate of 3.75 per cent. A single person can get a government house (where available) for GY$5.5 million and will pay GY$25,000, monthly mortgage. That is a much higher portion of the monthly income, but single buyer home purchasers are always at a disadvantage.
A higher income couple making GY$250,000 each, can build a home for GY $20 million, and pay GY$116,000 monthly mortgage, amortized over 30 years. This assumes an interest rate of 5.75 per cent.

The complainant should look around the world, and especially to places where Guyanese have migrated. It is worthwhile making the comparison. The median house price in Toronto is CAD $1,171,300, while the average salary in Toronto is CAD $62,000. The average house price, therefore, is 18 times the average salary. Mind you, average entry level salary in Toronto is CAD$33,000.

The average price for a house in Florida is US $377,000, while the average income in Florida for the 25th percentile is US$2,994 per month. A house purchased at the two averages will result in a monthly mortgage payment of US$2,090 (includes property tax and home insurance).

The monthly payment then will be close to 70 per cent of the monthly salary! Do you get the picture? Guyana looks very good by comparison.
Within the Caribbean, you should know that house prices went up 38 per cent in Trinidad and Tobago since 2022.

The letter writer does have a solid point about rent escalation. Most of the spectacular rents we see, however, are geared towards foreign workers usually connected to oil and gas.
Minister Croal and Minister Rodrigues have both made it clear that the accelerated housing push on board now will bring greater balance to the housing market.

It must also be said that tens of thousands of Guyanese who had little savings and no long-term wealth, can now hold their heads high because of rapid asset appreciation.
Many ordinary people have become quite wealthy, at least on account of property values. The challenge is for the baking system to facilitate that wealth into agile liquidity.
The concerns of the anonymous would have been more effective had he or she been more guided by the dynamics of the housing market, rather than by attempts to score cheap political points.

Yours sincerely,
Dr. Randolph Persaud