Last Updated on Tuesday, 11 April, 2023 at 10:04 am by Andre Camilleri
An increase in property prices is forcing people to settle for cheaper locations than the ones they would really want, the PwC Malta Property Barometer shows.
PwC Malta on Tuesday released the fourth edition of its property barometer which analyses the current local sentiment towards local real estate demand preferences and key trends. It was carried out between Q4 2022 and Q1 2023 by means of an online survey and targeted the total population residing on the Maltese Islands, garnering 405 responses. This edition focused on topics relating to purchasing and rental preferences, sources of financing, regulatory developments, sustainability considerations, sentiments towards real estate agents and available information on the market.
One key trend that was observed during the fourth run is that there was a shift in demand for property sales to rentals. When compared to the previous run carried out during the same quarter of 2022, demand for property rentals increased (Q1 2023: 31%; Q1 2022: 12%) while it fell for property sales (Q1 2023: 42%; Q1 2022: 51%). The results of this edition registered the highest demand for property rentals and the lowest for property purchases out of all the barometer editions carried out to date.
These public sentiments seem to echo secondary market data. Data published by the NSO , indicated that, during 2022, the number of promise of sale agreements relating to individual buyers of residential property amounted to 11,083, a 22% decrease when compared to those registered in the previous year. Based on data reported in the Housing Authority’s latest Annual Malta Residential Rental Study , by the end of 2021, the rental register comprised almost 38,000 active contracts, which represented an increase over the prior year. One is yet to assess whether this could mean that a shift is being witnessed from residential property sales to property rentals, based on the data included in the upcoming Housing Authority report.
A movement between different brackets of property values was also observed in this survey, as respondents shifted towards the lower end of the price spectrum, namely from properties valued above €501k to those valued between €351k and €500k. This could very likely be influenced by inflationary pressures which dented consumer purchasing power throughout the previous year.
Another finding is that different locations are initially sought after than those subject to residential property deeds. The top five most sought after localities according to our survey are Mosta, Attard, Naxxar, San Gwann and Birkirkara. However, NSO data shows that contracts are being registered mostly in Saint Paul’s Bay, Birkirkara, Ħaż-Żabbar, Mosta and Imsida. People may wish to purchase property in a certain locality but due to high prices, they end up having to settle for a cheaper location.
In the 2022 JLL GRETI , Malta was attributed a score of 3.64 in the Index, thereby falling within the Low Transparency category. One of the areas that Malta ranked poorly in was the availability of data. This was echoed in our survey findings as only 31% of the respondents felt that there is enough information available in the market for them to make an informed decision before acquiring property.
The results of this survey highlight some of the realities and issues that the real estate sector is currently experiencing. The potential shift of preference from purchasing property to renting property may be indicative of an emanating trend, while the pressures of inflation persist even in 2023.
Understanding the current market sentiment while also looking at secondary data through improved transparency can help address existing issues.