A prospering economy has led to real estate growth, but will the property market in Malta continue with current trends? Here we take a look at the most important property trends for the months to come.
Over the last few years, Malta has experienced robust real estate growth, making it an advantageous investment locale in Europe. However, debate abounds over whether real estate price appreciation will continue, and whether Malta is experiencing a real estate bubble. Here, Kevin Buttiġieġ, CEO of RE/MAX Malta, clarifies current real estate trends and warns against unfounded speculation.
Are real estate prices still increasing?
On the back of a surge in prices, the Maltese property market is now witnessing price stabilisation. “Prices have been slowly stabilising since about October 2018,” explains Kevin. “What is interesting is that this is happening in real estate in Malta across the board – be it residential or commercial.”
One anomaly to this trend is Gozo where prices started accelerating later than the rest of Malta. So, Gozo is, in fact, still experiencing price acceleration. Whether or not Gozo will follow price trends witnessed on the larger island is yet to be seen, but arrows are pointing in that direction.
Likewise, the high-end market in Malta also seems to be moving at its own pace. “There has been a general slow down in the hike of prices in high-end property,” remarks Kevin. “In 2019, we’ve seen some upmarket real estate that has dipped in price, as well as properties that are still being sold at very high prices. But, overall, the high-end market seems to be stabilising too.”
What do buyers want?
“A second trend that stands out is that buyers are becoming extremely careful when purchasing property on plan,” says Kevin. “Buyers know what they want and what they don’t want more than ever before.”
What this means is that developers are under pressure to deliver well-finished products that meet the high standards buyers have come to expect and demand. “There’s more than enough choice out there, so developers simply won’t be able to sell if their products are not up to par,” warns Kevin.
What’s the main challenge right now?
Over the past five years or so, deterioration has hit the Maltese banking system. Opening a bank account on the island has become an unduly long, complicated and convoluted process – for locals and foreigners alike. Besides needing to present a wide array of documents, some of which seem unnecessary, slow-processing times have become the norm.
Kevin explains that this excessive red tape in Maltese banking has created difficulties in many sectors, and real estate is no exception. “The bureaucracy at Maltese banks has become unreasonable. No one wants to live in a country where it takes some three to six months to open a bank account.”
Is Malta a real estate bubble or a thriving landscape?
Locations in Malta that are attractive to expats in the financial services and gaming industries have seen immense growth. “Of course, areas like St Julian’s, Sliema and Gżira have increased in price, but it’s interesting to see that the south of Malta is also thriving – as is the north to some extent,” explains Kevin.
That said, the upsurge in prices has led to speculation that Malta is experiencing a real estate bubble. However, on the flipside, Malta’s economic growth, low unemployment rate, abundance of skilled immigrants and conservative home-equity lending from banks make it difficult to support the idea that the island is waiting for a real estate bubble to burst.
“Malta is not in a real estate bubble,” asserts Kevin. “A bubble describes drastic situations – like when property prices in Latvia dropped by 50%. Slight shifts in price directions of 5 or 10 per cent do not indicate a real estate bubble. In Malta, we have never been close to being in a bubble, and we most likely never will be.”
What about the next six months?
“There is nothing to worry about in the real estate sector in Malta because prices will continue to stabilise, and the south and north will continue doing well,” says Kevin. “Malta continues to be an excellent place to invest in property – but, right now, it is Gozo more than ever that has become the one to watch, and the one to want.”
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