Malta property boomResidential construction levels and the price of property in Malta boomed between 2003 and 2004, recording price increases of 20.3% and 13.3% respectively, after a 2003 referendum voted in favour of Malta joining the European Union on 1 January 2004.
Located in southern Europe just off the coast The Myst Condo Showflat of Sicily, properties in Malta, which comprises an archipelago of seven islands, with a population of 400,000 inhabitants, has long appealed to overseas nationals. This is not just because of the Malta’s intense Mediterranean climate, but also owed to the country’s tax-efficient status; Maltese residents enjoy one of the lowest levels of income tax in Europe.
Demand for property in MaltaBut international demand for homes in Malta, which primarily comes from the UK and Scandinavia, has waned over the past year or so. This is particularly the case with “British buyers” largely due to “the fall in the UK pound’s value” against the euro and Maltese lira, says Paul Hay of Malta Homes. The decline in sterling’s worth has significantly increased the cost of buying property in Malta.
Although property prices have fallen, the downturn has been nowhere near as drastic as most other European markets,” adds Hay.However, domestic demand for homes in Malta has been “surprisingly resilient”, says James Vassallo, senior manager, Tigne Point property development.
Vassallo continues: “Reduced interest rates have encouraged fence sitters to engage [in housing transactions] and have made those occasional bargains that much more attractive.”
Malta property prices start to stabiliseAlthough housing values are still falling in some areas, they have already stabilised in other regions, mainly because most Malta property owners are not so highly leveraged through borrowed money, as say those residing in the UK.
Despite the short-term market slowdown, the Malta property sector could find itself flying high in the medium to long-term, buoyed by growing tourism levels and an ever-increasing number of low-budget airlines.
Malta homes flying highIn 2008, EasyJet, Ryanair and Scandinavian Airlines, all either introduced or increased its direct routes from the UK and Sweden to Malta.
Vassallo adds: “The increased air traffic is certainly good for the island especially in these trying times. Malta is strategically placed between the west and east and the growing importance of North Africa. It appeals to businesses looking to relocate to the Med and over the years business travel has constantly grown.”
Rental investment properties in MaltaWhile there may have been a fall in foreign demand for Malta homes to buy, Hay says that greater tourism levels are increasing the requirements for holiday homes in Malta to rent.
“From a holiday letting point of view, 2009 appears to be looking healthy, when taking into account the global economic situation, says Hay. “In fact Air Malta recorded one of its most successful flight occupancies for the first quarter of 2009 for some years.”