The gap between the asking price for property and the eventual selling price was 15.5 per cent in 2014, slightly lower than the gap of 16.21 per cent in 2013, according to the records of one of the leading real estate companies in Malta, Re/Max.
Another interesting figure to emerge from the study was that the gap in 2012 was 23 per cent.
The figures only relate to one agency – albeit one with three times the presence of its closest competitor. Gozo was not included as the numbers were smaller and might therefore not be statistically significant. And they do not reflect properties sold directly or through a sensara (broker), which account for almost 60 per cent of property listings.
Nevertheless, the trends are very interesting, particularly when cross-referenced against the length of time that the property took to sell.
Jeff Buttigieg, the regional director for Re/Max, said that properties listed with multiple agencies were up for sale at the original price for 521 days on average. Once the asking price was dropped, they remained on the market for another 133 days, a total of 654 days. In 2013, the total number of days was almost unchanged at 653.
“Once a property gets within seven to 10 per cent of its real value, then it sells much faster, within a little more than four months,” he said.
“This means that no one will even consider a property until it falls into the right price category.”
Even more dramatic was that a property with an exclusive real estate agent sold within 32 days (2013: 65 days).
Re/Max also noted considerable differences between locations, with Sliema seeing the narrowest gap – 11.81 per cent – and the highest in central Malta – 19.3 per cent.
Re/Max also compared the average selling price of all the properties it had sold with the average asking price of all the properties listed, not just those that had been sold, and the gap was 35 per cent.
“This explains why so many properties remain on the market for a much longer period than they should,” he said.
The figures also put into context reports by the Central Bank of Malta based on advertised prices which stakeholders have often said did not capture the full picture – because the actual selling price was lower. For 2014, the CBM reported a rise of seven per cent, accelerating from a growth rate of 2.1 per cent in the previous year.
Eurostat, the EU statistical agency, reported that prices rose by 11 per cent in the fourth quarter of 2014, compared to the same period a year earlier, significantly higher than the EU average of 2.6 per cent and the euro area average of 1.1 per cent.
The Re/Max study could not identify the rise in property prices as the mix of properties sold was affected by the increase in smaller properties for first-time buyers, spurred by special terms to boost this sector.