COVID-19 is no match for the Maltese property market as prices rise faster than ever
Property prices have grown by 6.7% since last year, according to figures published by the National Statistics Office.
The Real Estate Price Index tracks price growth in the real estate market using 2004 as its base year.
As published in the government gazette last month, the provisional index in 2022 is 222.33 – meaning houses are twice what they were worth back in 2004 – from 208.37 per year of the former.
Indeed, the rate of change between 2021 and 2022 was the biggest growth spurt to date. The last time the rate of change increased by more than 6% was in 2019, when the property index grew by 6.5% between 2018-2019.
The real estate price index confirms what researchers have previously established. The local property market has seen huge growth between 2015 and 2022. If a property was priced at €151,000 in 2015, it is now valued at €222,000.
COVID-19 has not been kind to the real estate market either. Prices continued to grow at rates of 5.5% and 4.6%, which were still higher than the rates of change seen between 2011 and 2015.
While the rate of change slowed during the pandemic, it is now back on its previous trajectory of rising prices.
The Government has introduced a reduced tax and duty rate of 5% and 1.5% respectively on the first €400,000 of the value of real estate. This reduction was a temporary COVID-19 measure introduced in 2020 to keep the property market afloat.
The date of registration of the final act on property transactions eligible for the scheme had been extended from the end of June 2022 to September 2022.
Jerome Caruana Cilia, the spokesperson of the Nationalist Party for finance, proposed that the scheme be extended at least until the end of January 2023.
Many researchers have been trying to gain knowledge about Malta’s property market. Last June, Dhalia Real Estate and Grant Thorton collaborated on a study and found that today’s house prices are double what they were in 2013, with rapid growth recorded in the five years leading up to for 2019.
But is this sustainable? Daniel Gravino, the economist who presented the report and findings, had said that the current market prices are “only sustainable”. The market can remain stable only if the income also remains stable. If property prices rise, income will have to rise as well.
In a separate study from last August, economists Glen Spiteri and Marie Briguglio found that single people living in Malta have little hope of buying property unless they buy it with another person or inherit family property.
Property prices are far from homogeneous. Last year, the Central Bank of Malta developed its own housing index, using Tas-Sliema property as a base, to compare property prices across the country.
According to the index, the cheapest rental properties in relation to Tas-Sliema were found in Gozo. Average one bedroom apartments with a monthly asking price that is 64.3% less than a comparable unit in Sliema.
But Gozo may not be safe from rising property prices in the long term. A separate property market report by Djar and EY showed that the Gozo property market was reporting persistent price growth across the island, indicating continued price convergence and increasing homogeneity between two islands.