Property prices drop in first three months

The price of property returned to negative territory in the first three months, reversing the slight improvement registered last year.

Figures released by the National Statistics Office show that the all-property price index dropped 3.5 per cent in the first quarter when compared to the same period last year.

The index takes into account maisonettes, apartments and terraced houses.

Maisonettes have seen their price drop by 9.8 per cent while apartments registered price decreases of two per cent.

According to the NSO, the downward trend in prices was not mimicked by the volume of sales, which increased by 7.1 per cent.

Even if only marginal, property prices had started edging up last year, reversing the downward trend for the whole of 2009 although the volume of sales had dropped.

The latest figures come on the back of the Central Bank’s warning that banks are facing heightened credit risks due to declining property prices and a call by developers for the government to carry out a legal and economic study of the property market.

Malta Developers Association president Michael Falzon said in June “the myth” that property prices in Malta never went down had ended. He had said the property bubble was “deflating” rather than bursting and it required a holistic policy to be managed properly.