The Central Bank's index of advertised residential property prices was down by 1.4%, year-on-year during the fourth quarter of 2009, as against the 2.5% decline registered in the third quarter.

The bank said that over the year, average property prices were 5.0% lower, reflecting the more pronounced contraction seen in the first half of the year.

"The relatively modest fall in the index towards the end of 2009 suggests that the negative trend in prices appears to have bottomed out and that the residential property market may be stabilising," the bank said.

It added that the available information also suggested that the drop in the supply of properties coming onto the market may also be moderating.

In the December quarter the number of properties advertised for sale in the bank's sample - an indicator of supply conditions in the housing market - dropped by 7.9% on a year earlier, following a 24.1% decline in the previous three months.

Meanwhile, the number of building permits issued by the Malta Environment and Planning Authority was down by 3.7%, year-on-year, as against a 38.9% drop in the previous quarter.

The bank added that during the December quarter, the prices of apartments - which make up over half the properties surveyed - were down by 0.5% on a year earlier, compared with the 4.0% drop reported in the previous quarter. Asking prices of maisonettes, which represent 18.1% of the properties monitored, shed 3.3%, following a decline of 3.8% in the September quarter.

On the other hand, the growth rate in the prices of terraced houses eased to 0.9% in the December quarter, while that of dwellings in the ‘others' category rose slightly, to 5.5%.