Residential property prices are still going up - but not as fast as they have been doing, according to the Central Bank of Malta.

The Quarterly Review released on Tuesday said the National Statistics Office's Property Price Index, which is based on actual transactions involving apartments, maisonettes and terraced houses, rose by 4.1% on an annual basis between July and September, following a 4.5% increase in the second quarter of the year.

The rate of increase was in line with that registered in the euro area, which also stood at 4.1% in the third quarter.

Residential property prices are being supported by a number of factors, it said, including the government’s scheme for first-time buyers and a low interest rate environment which makes property a more attractive asset.

The bank said buoyant labour market conditions and strong growth in disposable income, together with the rise in foreign workers and, to a lesser extent, the Individual Investor Programme, would continue to lift property prices.

"At the same time, the strong growth in residential permits recorded in recent quarters should take off some of the upward pressure on house prices, as new construction activity counters excess demand for property," it added.