Home Real Estate COVID-19 no match for Maltese property market as prices rise faster than ever

COVID-19 no match for Maltese property market as prices rise faster than ever

by Ozva Admin

House prices have grown by 6.7% since last year, according to figures released by the National Statistics Office.

The Real Estate Price Index tracks price growth in the real estate market using 2004 as the base year.

As published in the government gazette last month, the provisional rate for 2022 is 222.33, meaning houses cost double what they did in 2004, up from 208.37 the year before.

In fact, the exchange rate between 2021 and 2022 was the highest growth to date. The last time the exchange rate rose above 6% was in 2019, when the real estate index grew 6.5% between 2018 and 2019.

The real estate price index confirms what was previously established by the researchers. The local real estate market saw massive growth between 2015 and 2022. If a property was priced at €151,000 in 2015, it is now valued at €222,000.

COVID-19 was also no match for the real estate market. Prices continued to grow at rates of 5.5% and 4.6%, rates even higher than the variation observed between 2011 and 2015.

While the exchange rate slowed during the pandemic, it has now returned to its previous path of rising prices.

The Government introduced a reduced tax and duty rate of 5% and 1.5%, respectively, on the first €400,000 of real estate value. This reduction had been a temporary COVID-19 measure introduced in 2020 to keep the real estate market afloat.

The final deed registration date for property transactions eligible for the scheme had been extended from the end of June 2022 to September 2022.

Jerome Caruana Cilia, finance spokesman for the Nationalist Party, proposed that the scheme be extended until at least the end of January 2023.

Many researchers have been trying to find out about the Maltese real estate market. Last June, Dhalia Real Estate and Grant Thorton collaborated on a study and found that house prices today are double what they were in 2013, with rapid growth recorded in the five years leading up to 2019.

But is this sustainable? Daniel Gravino, the economist who presented the report and the findings, said that current market prices are “simply sustainable” if people’s expected future rental income is based on the rents that prevailed in 2021. That these rates can be maintained in time depends on various demands. and supply factors.

In a separate study 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 someone else or inherit family property.

Property prices are far from homogeneous. Last year, the Central Bank of Malta developed its own housing index, using Sliema properties as a base, to compare property prices across the country.

According to the index, the cheapest rental properties relative to Sliema were found in Gozo. One-bedroom apartments have an average monthly sales 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 run. A separate property market report from Djar and EY showed that the Gozo property market had been reporting persistent price growth across the island, indicating continued price convergence and increasing homogeneity between the two islands.

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