Not many vendors will admit it but current market pricing is unrealistic. We are sailing through an economic climate which has been good to us for quite some time. Notwithstanding political turmoil, the economy is healthy. The construction industry is booming and there is enormous demand for residential property in most of Malta and Gozo as well.

With this same demand, we regularly receive several requests for residential units with requirements which clearly do not fit current market pricing. We endeavour to source properties that fit our clients’ exigencies but we keep hearing the same complaint ‒ that prices are far too high for what they term as ‘basic accommodation’.

It would seem that some owners and developers forget that the banks will only finance what they deem their client will be in a position to repay and on their terms only. Clearly, this affects the owner’s potential to sell.

Nobody wants a tenant who is unable to pay

A single purchaser is at a huge disadvantage when buying property. In today’s context, the single buyer’s purchasing power is weak compared to that of a couple. Also, far too many relatively ordinary units (in almost any area of Malta) are listed at more than €200,000 while many of these buyers do not feel like these properties match the price tag. What’s more (or less, in this case) is that the vast majority of these units do not even exist as yet ‒ they are offered for sale on plan.

While purchasing property on plan is an acceptable option, it is rarely the buyer’s first preference. A prospective purchaser will want to view the unit already constructed, inspect its finishes and get an overall feel of the contemplated acquisition – this is obviously more challenging when the unit to be sold is offered on plan. While we do offer a comprehensive service, providing clients with artists’ impressions, digital renderings, lists of finishes and any other details they require, it is somewhat more difficult for a purchaser to reach a final purchasing decision.

There seems to be an inaccurate assumption that since market demand is so strong, then purchasers will purchase at any cost – but this assumption is wrong because the banks will only finance what a purchaser can afford and also because buyers will not, in fact, purchase property at all costs (pun intended).

A word or two need also be said regarding the rental market. This is somewhat tied to the general market as well, even though there is a significant demand for rental tenements and prices are starting to stabilise. The reason is simple – owners are beginning to realise that a monthly rent which is unaffordable will leave a tenant in difficulty to pay it and nobody wants a tenant who is unable to pay.

The geographical availability of residential property has grown and continues to grow. We are now seeing more prospective lessees moving towards the centre and the south of Malta. To some extent, this impacts the more popular Sliema/St Julian’s/ Gżira/Swieqi part of the market. 

I believe market prices will cool down; if not now, within a few months. Vendors will have the good sense to realise that their price is unrealistic and that what does not sell must come down in price. What’s more, many construction projects dotting the islands will soon reach completion and demand will start to be met. This will also stimulate the market again and we will see another wave of transactions.

If you’re an owner willing to sell, this is the time to reconsider your list price. If nothing else, it is the time to allow for price negotiation. In all probability, the profit margin will be wide anyway.

Dr Felice is the branch manager at Century 21 Platinum. For more information, call +356 2099 8558 or send an e-mail to platinum@c21.com.mt.