In July, 1,354 residential property final deeds of sale were signed. This is an absolute record for the month of July in Malta’s history. In fact, 18% more properties were purchased last July than in July 2020, as well as 6% more than in July 2019, the previous record month of July before the pandemic.
Before Government announced the temporary reduction in stamp duty, as part of the economic regeneration plan, the number of contracts signed had fallen to only 552. This means that by last month the number of final deeds of sale were two and a half times the number observed in the month before this measure was announced. Looking at the first seven months of 2021, one finds that 8,231 sales contracts were signed against just under 6,000 a year ago. This is an increase of more than a third, at a time when economists had predicted 50,000 unemployed and the economy going to tank.
18% more properties were purchased last July than in July 2020.
The result for July 2021, in addition to being an all-time record for the month of July, also marks the highest number of contracts signed since October 2018. In total, the value purchased this month totalled almost €291 million. Taking the first seven months of 2021, the total value of contracts signed reached almost €1.8 billion. During the corresponding period last year, the value of transactions was only €1.1 billion. Even when compared with the last year before the pandemic, this had only reached €1.5 billion. It is clear that if these trends are maintained, 2021 will be the best year for property sales ever.
The prospects for the property market may be even more positive than suggested by the trend seen between January and July. In the first seven months of this year, in fact, 9,159 promises of sale were made for the eventual purchase of residential property. This compares with 5,645 in the same months of 2020, and 7,395 before the pandemic. That means that while in the first seven months final deeds for sale rose by 33%, the number of promises of sale during the same period rose at double that rate.
As promises of sale take place a few months before the final deeds of sale is signed, this means that a further increase in the number of sales contracts can be expected in the coming months. This will not just further increase government revenues from this important source of tax. It will also lead to substantial business for home improvement, furniture, appliances, and furnishings stores. Thousands of new homeowners will be shopping around to finish and furnish their new properties.
Some are already noticing how stores are finding it hard to keep up with demand. It seems that in the coming months the enormous rise in household savings observed during the pandemic will begin to be unwound and transform itself in private consumption.
The healthy state of domestic demand is the principal reason why international institutions are revising upwards their economic forecasts for Malta.