Residential property prices drop in the first quarter of this year, according to a survey by the Central Bank published today.

It said that it index of advertised residential property prices, fell for the second consecutive quarter in the three months to March 2011.

The All Property Price Index compiled by the NSO, based on contracted property prices also registered a decline during the quarter.

According to the Bank's index, after having dropped at an annual rate of 2.0% during the previous quarter, advertised property prices decreased by 2.6% year-on-year during the second quarter.

The drop was primarily due to lower asking prices for terraced houses and for properties in the "other" category. Prices for terraced houses declined for the third consecutive quarter, falling by 6.1% on a year earlier. Prices in the "other" category, which consists of townhouses, houses of character and villas, fell by an annual 12.8%, a similar drop to that experienced in the previous quarter.

The prices of maisonettes contracted marginally.

On the other hand, prices of apartments – which make up almost three-fifths of properties surveyed – rose by 1.0% on a year earlier, softening the drop in overall property prices. During 2010, prices for apartments had risen in the first three quarters, before falling slightly in the final quarter.

In the first quarter of 2011, the number of properties advertised for sale contracted by 9.9% on a year earlier, compared with a 12.4% decline in the December quarter.

Meanwhile, the number of building permits issued by the Malta Environment and Planning Authority rose by 25.4% on the corresponding quarter of 2010, mainly due to a base effect as the number of permits issued in that quarter was particularly low. The increase was mostly due to apartments, for which a substantially higher number of permits was issued. On the other hand, there was a fall in the number of permits for the construction of maisonettes and terraced houses.