‘Good prospects’ for the property market
The property market is picking up again after the slowdown experienced during the recession, with the value of promise-of-sale agreements increasing by nearly 17 per cent in the first half of this year.
These are encouraging signs for estate agents, who are seeing “good prospects” for the rest of the year, Association of Estate Agents president Ian Casolani said.
Figures seen by The Sunday Times showed a slight increase in the number of promise-of-sale agreements (konvenji) signed between January and June this year when compared to the same period last year.
However, the value of these agreements increase exponentially when compared with the value of the properties purchased in the first six months of 2009 – when the recession was in full swing.
Just over 4,070 agreements were signed in the first six months compared with 3,956 in the same period last year.
Although this number represents just an increase of 118 agreements, the value of the agreement signed increased significantly.
The konvenji in the first six months of 2009 were worth €445.85 million while those signed in the first half of this year increased to €520.8 million.
Promise-of-sale agreements are seen as a good indicator of the market, which has proved to be lucrative for many years.
Last year, the market saw a general slowdown in property purchases and even in the number of requests. But in the meantime, construction projects continued.
This saw hundreds of houses being demolished to make way for smaller apartments, flooding the market with affordable, albeit unoriginal homes, especially for first-time buyers.
Sources close to the construction industry said it was only a few months ago that the property market had started to stabilise.
Before that, there were two factors leading to the slowdown in property sales: the economic crises and the tightening of people’s budgets, as well as an increase in requirements imposed by banks when faced by customers asking for home loans.
Some people, the sources said, were even asked to get guarantees from their parents or use their parents’ properties as guarantees for their home loans.
When banks started to relax their conditions, the property market started to recover, with house seekers spoilt for choice with the extensive array of properties available.
Recent National Statistics Office figures showed there were 35,000 new properties on the market.
Mr Casolani said good properties were selling fast while those which were overpriced continued to suffer.
He said there was a good mix of first- and second-property buyers who were searching the market for a good deal. The good news was that speculative property buying – those who bought property to sell immediately, to make a considerable profit – had decreased.
With regard to budgets, Mr Casolani said average first-time buyers had a budget of between €150,000 and €200,000. Those buyers with a mid-range budget of up to €450,000 had tightened their purse strings, capping it in the region of €300,000 to continue searching for a better deal.
Apartments and maisonettes continued to sell, and these were the most requested properties. Terraced houses were being knocked down to make space for apartments so only a few of these are on the market.
Despite the global financial crisis, estate agents still registered a good year, especially due to the interest of foreign buyers.
Although British buyers – Malta’s largest market – decreased, especially because of the weak sterling when compared with the euro, other markets started to emerge, such as Scandinavian, Chinese and South African.
Mr Casolani said foreign buyers looked at apartments and mid-range properties such as maisonettes. There were also one-off foreign customers looking for more high-end properties.
Contacted for his views on the increase in promise-of-sale agreements, Finance Minister Tonio Fenech said: “The increased activity observed in the property market, especially the buoyancy in contract value, further confirms that Malta’s economic recovery is gaining momentum.”
This corroborated other positive economic indicators that had been released over the past few weeks, giving further evidence economic activity was picking up.
He said an expansion in the property market was not only perceived as a sign of trust in the economy and its potential, but also as an important economic driver in itself.