The Current State of the Real Estate Market in Malta

With the rising costs of living, we’re putting Malta’s property market under the microscope to find out how it is faring currently compared to recent years. Malta’s real estate market is famed for above-average growth and returns, but is Malta decidedly an opportunistic or tactless place to buy in the current climate?

Let’s examine why the costs of living are rising, and what this means in the long term for both buyers, sellers, and renters.

The current state of the real estate market in Malta - doubled property prices

A recent study has shown that residential property prices have doubled in Malta since 2013. Despite the recent global pandemic, Malta’s real estate market has continued to thrive and only experienced minor setbacks in the first half of 2020. Looking back even further, amazingly throughout the 2007-2008 Global Financial Crisis, Malta’s property market endured only a small decline as well. How can a small country in the middle of the Mediterranean survive the test of external pressures and time? The short and simple answer is that it is just the ideal place to be. A post-COVID-19 world is now seeing a new wave of expats wanting to enjoy the relaxed Maltese lifestyle and 300+ days of sun a year, migrant workers wanting to join the continually growing goods and services industries, and investors wanting to take advantage of Malta’s continual short-term resident turnover. Who wouldn’t want a slice of cost-effective paradise?

Whilst it seems quite shiny and attractive from the outside to purchase property in Malta, there are always negative influences to consider that can see things change quite quickly – with inflation the latest drawback. The Central Bank of Malta has released their findings in their most recent quarterly report, discovering that services inflation has been the main cause of overall inflation in Malta recently. Much of it accounts for the ever-growing supply shortage of construction workers and materials. This, in turn, increases the costs for maintenance and the repair of existing residences, plus new developments, leaving owners asking for a higher than normal price to cover the higher associated costs. On the plus side though, house price inflation in Malta remains below that in the rest of the European Union, where prices are increasing at a much quicker rate.

The current state of the real estate market in Malta - affordability

Additional housing is required now more than ever to facilitate the growing population and positive real estate market projections. Does this mean it is a seller’s market if prices continue to rise? Well, not exactly. Like anywhere else around the European Union, it is completely dependent on a location within a country. For Malta, city locations and those in the hotspots with limited established residences are always competitive, thus prices have and will continue to rise. Investors are taking the opportunity to purchase properties with the view of medium to long-term ownership, that way they are almost completely guaranteed to sell at a higher price. Properties in less popular areas however are continually switching between a buyer’s and seller’s market. This is due to how many properties in an area are for sale at one time, and the demand. Malta’s property market therefore really is holding true to the familiar saying – location is key.

Economists have recently conducted a study on the affordability of property in Malta for locals. They have discovered that single people will most likely not be able to afford one unless they either inherit property from family or buy with another person. In order to encourage locals to continue purchasing properties, and therefore improve affordability, the Maltese government have introduced schemes to support the high demand for real estate. Some of these include both first-time and second-time buyer’s grants and a refund scheme for restoration expenses. Is this enough to keep locals in the property market though? Malta could see young people driven away due to the increasing property prices, as wages are not increasing to match the inflation. It remains to be seen if Maltese properties will soon only become accessible to affluent investors.

The current state of the real estate market in Malta - buy to let or buy to live

Approximately two-thirds of all Malta’s properties listed in print media and online combined are apartments. Malta is seeing a rise in the popularity of small one or two bedroom apartments, both being the preferred choice for buy-to-let and buy-to-live properties. Stand-alone houses, maisonettes and townhouses have started to lose popularity with there being such a large market for tourists and migrant workers needing temporary living solutions. The supply of properties is still larger than the demand, thus they can be left vacant if prices, location or condition are not matching that of the needs of residents. Many properties are left vacant intentionally as they are second homes or holiday residences, however for those that are struggling to find tenants, the Housing Authority has introduced schemes and programs to aid investors. Properties that are a minimum of 30 years old and have been vacant for more than a year may enter into a 10-year lease agreement with the Authority. This is to encourage owners to utilise their property, and are incentivised with a grant to refurbish it and receive regular rental payments with a 2% increase annually. Owners are subject to certain terms and conditions, so make sure to know the ins and outs of your lease prior to signing. 10 years is a long time to commit your property, so be sure to plan ahead to know if it is the right option for you!

For those wishing to enter a steady property market, Malta is definitely a place that should be high on your list of places to consider. Recessions have had much less effect than the rest of the world on the real estate market. More and more tourists, digital nomads and migrant workers are needing accommodation as they come flooding back after the pandemic too. For those wanting to rent a property, the market is still very much competitive, thus rental prices remain reasonable. The time to buy in a popular location is now for a steady long-term investment, and be sure to follow the highs and lows of other locations too to snap up a great deal where possible. Overall, whether buying or selling, opportunities are proving abundant with the Housing Authority making it as accessible as possible too. Don’t miss out on your chance to take advantage of owning a property in Malta as prices continue rising, because it may be a long time before another fantastic market opens!