In many European countries, housing has become the most pressing issue for people. According to the latest standard Eurobarometer, 61% of Irish respondents saw housing as the biggest challenge in their country, while in Luxembourg this issue worries 56% of those interviewed. In the Netherlands almost a third of households are seriously concerned about housing, while in Portugal, German,y and Spain, the proportion is of one in six people. In Malta the proportion is 9%, lower than the European average and on a decreasing trend.
The rising concern across Europe about housing is happening because the interest rate being charged on mortgages has risen strongly. In Italy, for example, from facing a rate below 1.7% a year ago, borrowers now face one of 4%. The same has happened in Germany. On a loan of around €300,000, such an increase means a financial hit of almost €7,000 per year or almost €20 more interest per day to be paid. In Malta, not only has this not happened, but first-time buyers who borrow from banks have started to be given an annual payment from the Government of €1,000.
This divergence in interest rate burdens has contributed to maintaining a sound outlook for the property market in Malta. This is in contrast with the rest of Europe, where the market has been in decline already since last year, with some countries seeing a decrease of as much as 30% in property sales, according to Eurostat.
A press release issued by the National Statistics Office indicates that the number of promise-of-sale contracts this year in Malta has already reached almost 12,200, or an average of 36 promise-of-sale contracts per day. By November, households had entered a thousand more promise-of-sale contracts than had been entered into a year before.
In the first eleven months of this year the value of purchased residential property had already exceeded €2.9 billion. This is the second largest real estate turnover ever recorded in Malta’s history. If one divides this value by the number of deeds of sale that took place, the average price per deed of sale was €264,000, or 15% more than a year ago.
If these price trends persist when the record number of promise-of-sale contracts become final deeds of sales, we will again have a new record in terms of the value of residential property sold. Recent statistics on the number of first-time buyers suggest that only a third of sales are being made to first-time buyers. It thus appears that a large chunk of the property market is driven by people buying a second property and by others who are second-time buyers, i.e. changing their property.
In the meantime, statistics also indicate that sales of property in Gozo, although already declining slightly compared to previous record figures, are still 75% more than before the stamp duty on Gozitan properties was lowered in 2017. When the normalisation of the stamp duty rate takes effect in January, the pressure on the property market in Gozo should come closer to the historical average, thus helping towards the fulfillment of the ‘Gozo, island of villages’ strategy.
Photo: Efrem Efre