The Malta property market has enjoyed a very successful 2018, with the most notable highlight being named the most lucrative real estate market by international consultancy firm Knight Frank. Plus in the space of just 12 months, the price of Maltese property went up by a whopping 17%!
What’s behind the 2018 success of the property market in Malta?
According to experts it was a confluence of factors, including a disparity between supply and demand, improved national infrastructure, as well as political and economic stability. Malta has also experienced impressive developments in the tech industry over the past year which can be largely attributed to the state’s investment in the iGaming sector and blockchain technology.
Now, all of this development obviously bodes well for the real estate market in Malta, especially if you’re an existing investor. However it makes things quite difficult for those who want to purchase property in 2019, as low-earning Maltese locals can already attest.
Property prices in Malta are higher than they’ve ever been and getting finance from banks is getting even tougher for middle-class locals that want to purchase property. As a result, those locals who already own property will be looking to hold on to it for dear life.
Now that we’ve given you a background of the Maltese property market thus far, here’s an overview of what to expect of the Malta property market in 2019.
What will happen in the Malta property market in 2019?
Before we go into the Maltese property market trend predictions for 2019, let’s note that while the country’s property price index started at 238.4 for the beginning of 2017, it jumped up to 241.9 in the beginning of 2018. According to experts these are usually the makings of a property bubble which will eventually burst, giving way to price dips and bank failures.
Another possibility is that the property market in Malta will overheat in 2019. This will cause gentrification that makes Malta property for sale accessible only to the wealthy few. Overheating typically leads to bank foreclosures as well, and low-wage earning tenants tend to have difficulty affording monthly rent payments. In order for the market to cool down afterwards, property prices will significantly decrease as the supply increases.
Possible scenarios for the Maltese property market in 2019
For now, the property market in Malta is experiencing spectacular growth and there’s still a chance to put measures in place that will help to alleviate the impact of some of the risks.
Some of the potential solutions that have been bought forward include propping up bank resilience by making sure that mortgages come with macro-prudential limits, protecting low-income citizens from ballooning property prices by offering more social housing, and growing the overall housing supply.
If the Maltese government were to apply these and other measures in 2019, then fiscal revenue would flow in a more predictable manner and there would be a higher housing demand. This would obviously translate to stable and more reliable growth.
2019 Goals for the property market in Malta
According to an address by the country’s Finance Minister Prof. Edward Scicluna, more economic growth is not only a welcome prospect for Malta but one of its major objectives. In order to achieve continued growth in the property sector moving forward, the Maltese government has put the following goals into place:
- First home buyers will be given a duty exemption
- There will no longer be any Social Housing means testing in 2019, which means that eligibility will be limited to only two categories.
- The Maltese government will introduce a tax incentive in 2019, which is aimed at landlords who offer long-term leases at rates that are below the market standard.
- The government will introduce an equity sharing scheme designed specifically for citizens aged 40 and above.
- Those purchasing property in Gozo or Urban Conservation Areas (UCAs) will benefit from significant duty reductions.
- From 2019 onwards, the Maltese government will partner with NGOs to create social housing from dilapidated buildings around the country.
- As of 2019 all rental contracts will have to be registered with the Housing Authority in Malta.
- A revision of the Individual Investor Programme is underway and will lead to a more robust initiative.
The Malta property market is currently in a very good place. However, there’s no denying the presence of a few risk factors that could potentially lead to dire consequences. Luckily, the Maltese government seems to be planning ahead in a way that will help to significantly mitigate these risk factors. Time will tell whether these will be implemented timeously enough to make sure that 2019 is as successful a year as 2018 for the Maltese property sector.