Realtors welcome duty break

(CNS):  With the worldwide financial collapse of last year having a significant impact on the resort and investment real estate market, especially around the Seven Mile Beach area, local real estate expert Kim Lund says the stamp duty rate will be welcomed in a sector where business is down some 61%. Lund said that the industry was joining forces with government’s industry stimulus and would be looking to reduce the commissions.

“The last time government reduced stamp duty to boost the sector we agreed to reduce the commission by around 20%, and although this is not agreed by everyone yet, I expect it will happen,” Lund told CNS following the government announcement of the reduction in stamp duty by 2.5% in the Seven Mile and George Town areas, as well as a 5% reduction in the cost of building materials. “The industry wants to do whatever it can to support the government so I’m sure that we will see the cut in commissions throughout the sector.”

 In his most recent news letter Lund noted some of the serious problems surrounding the business and he said there was a huge difference today from this time last year in the volume of sales for the same period. However, prices have only fallen slightly, since last September, approximately 10% to 15% in total.  “This is likely because we have not experienced the massive run up in prices that other resort markets have experienced,” he explained. “When we look back over the last 5 years, residential homes have only increased in value by $56,408, which represents an increase of just 8%.  Condominiums have increased in value by $52,499 overall, in the last 5 years and this is a 10% increase.”

Comparing Cayman to Dade County in Florida, over a 5 year period which increased 151% in property values before their collapse it reflected a steadier market here.

 He said the number of properties sold from September 1st of last year, up to now, is 256.  Compared to the identical period, one year prior, the number of sold listings was 348. “It would appear that the current recession has been responsible for an approximately 26% decrease in property sales, to date, across the board.  Yet, in general, sales prices have held up quite well,” Lund noted optimistically. 

However he noted that the start of 2009 was pretty dismal with the industry being off about 29% in sold listings. While the local residential market is still somewhat more buoyant and active than the resort market, investors and purchasers from overseas are not yet ready to buy, although some have started to make offers.   He said that around 80% of this overseas group comprised mostly of the tourists and investors who generally buy resort properties predominantly on Seven Mile Beach are from the USA.

 But he said these tourists and investors who are not buying are still looking at resort property and able to find what they want and admit the value seems good but he said many aredeparting without making a commitment because they are afraid to spend their money.

 “Fear and greed drives most cyclical markets,” Lund said. “Right now, fear is the overwhelming factor holding back our real estate market.  Until that abates, we are frozen.  Later this year, this picture could be the complete opposite. You can almost cut the pent up demand with a knife – it is very prevalent.”