Property prices 'stable'

Property prices have levelled off after a steep increase over the past few years, estate agents told The Times in reaction to a European report ranking Malta highest in the EU for property price rises in 2004.

Douglas Salt, the president of the Federation of Estate Agents, confirmed that the steepest increase in prices was seen in 2003 and 2004, adding that this was partly due to the pre- and post-EU accession exhilaration.

Prices continued to rise until the end of last summer, when they started levelling off, he told The Times.

Michael Mifsud, from Luxury Living by Dhalia, agreed there had been a steep hike in property prices in recent years but said they stabilised last year.

He noted, however, that some developers and contractors were buying sites at prices above what they were worth, which could contribute to up prices.

A spokesman for Bank of Valletta confirmed that there has been an increment in the average value of loan applications over the past five years. However, he said, this was not dramatic. It had been on the rise ever since the bank offered home loans to customers.

According to statistics that have just been issued by the European Mortgage Federation (EMF), local property prices recorded the highest percentage rise among the 25 EU member states in 2004.

The figures show that property prices in Malta increased by an average of 18.8 per cent in 2004. France came a close second with 17.6 per cent, while house prices in Spain went up by 17.5 per cent.

At the other end of the spectrum, house prices in Germany dipped by 0.8 per cent and those in Austria by 0.6 per cent.

Mr Salt pointed out that the foreign investments registration scheme had boosted the property market. More than Lm290 million were repatriated through the scheme, which allowed Maltese residents who had invested assets overseas without the necessary permits to get above board by registering those assets.

Mr Salt added that local property prices have been going up by between six and 10 per cent annually since the 1960s but that they jumped between 15 and 20 per cent in 2003 and 2004.

The EMF's report says property prices increased by 10.4 per cent in 2003. The lowest rise since 1995 - 3.2 per cent - was registered in 1999. Property prices rose by 7.3 per cent in 2000, by 5.9 per cent in 2001 and by 8.3 per cent in 2002.

Mr Salt said the majority of buyers are Maltese. Of the 10,600 transactions last year, only 800 were sales to foreigners, he pointed out.

Asked whether the setting up of Smart City could lead to an increase in property purchases by foreigners, Mr Salt said the latter were likely to be on fixed-term contracts and were therefore more likely to rent homes.

He pointed out that while there were quite a few Maltese who owned two or three properties, the tax system did not make it feasible to offer them for rent.

He also noted a higher demand for one-bedroom apartments. This was confirmed by the BOV spokesman who said there was a growing trend of single people applying for home loans.

Speaking about the comparison between property prices here and in the UK, Michael Mifsud of Dhalia said prices outside London were more proportionate to salaries than those in Malta.