What impact COVID-19 will have on Malta’s property market remains a question mark but a new study has found that prices had started slowing down before the pandemic even hit.
Property portal Djar.com and EY Malta carried out a study on the property market over the period January 2017 and March 2020, the month Malta confirmed its first COVID-19 case, based off a database of over 90,000 residential properties.
It found that while property prices had shot up between 2017 and 2018, there was an “evident slowdown” between the first quarter of 2019 and that of this year.
Indeed, when considering the weighted average by price, all regions except Gozo showed average price declines, with the study indicating that higher priced properties had experienced a larger percentage price drop.
House price growth has flattened with slightly decreasing average prices, while average apartment prices have continued to increase, albeit at a slower rate.
The impact on the property market was even more pronounced in the period between the final quarter of 2019 and the first quarter of this year, with 69% of properties which remained listed during those periods registering a decrease in overall value.
According to the study, this could have been due to “the prevalent situation at the time”, a reference to the political crisis that hit Malta in the wake of Yorgen Fenech being charged with conspiring to assassinate Daphne Caruana Galizia.
On average, apartments increased in price from €243k in the first quarter of 2017 to €313k in the first quarter of this year, while average house prices increased from €431k to around €579k.
What was the impact on different localities?
Taking into account the 2019Q1-2020Q1 period, Burmarrad experienced the greatest relative price increase, averaging 1.7%. It was followed by Gozo (1.24%), Gudja (1.09%), Kalkara (0.96%) and Santa Venera (0.85%). The greatest property value decreases were recorded for Madliena (-3.37%), Lija (-2.17%), Valletta (-1.90%), Cospicua (-1.59%) and Rabat (-1.46%).
During the 2019Q4-2020Q1 period, property in Gozo (0.17%), Għarghur (0.08%), Mġarr (0.06%), Xgħajra (0.05%) and Għaxaq (0.02%) registered the highest increases, while Madliena (-1.05%), Senglea (-1.03%), Valletta (-0.76%), Cospicua (-0.64%) and Vittoriosa (-0.55%) registered the most significant decreases.
What were the average prices as of March?
Unsurprisingly, the data shows that the most expensive houses and apartments can be found in the Northern region, with houses ranging from an average of €230k for one bedroom to €806k for three bedrooms, and apartments ranging from an average of €244k for one bedroom to €460k for three bedrooms.
Gozo and the Southern Harbour regions were the least expensive regions for houses, with the value varying depending on the number of bedrooms, and Gozo was the least expensive region for apartments, with prices ranging from €132k for one bedroom to €182k for three bedrooms.
And what about COVID-19?
While no predictions or analyses were carried out about the elephant in the room, the study notes that the pandemic has “disrupted the real estate life cycle at various points and impacted involved stakeholders in various ways”.
This includes the interruption of physical real estate viewings and face-to-face negotiations, uncertainty reducing investors’ appetite, the disruption of the supply chain of construction materials, new challenges when obtaining financing, and tenants facing liquidity pressure which has a ripple effect on their landlords.
“Regular property market data analytics over the upcoming months will be key in obtaining a fuller evaluation of the extent of impacts on the local real estate market,” the study concludes.
What impact do you think COVID-19 will have on Malta’s property market?