Watch: Promise of sale agreements in 2022 ‘normal’, MDA chief not worried about property bubble bursting

The number of promise-of-sale agreements in 2022 was normal and there is no need to worry about the bursting of any property market bubble, president of the Malta Developers Association (MDA) Michael Stivala has told The Malta Independent.

He said this in response to data published by the National Statistics Office over a week ago showing that there was 3,500 fewer promise of sale agreements in 2022 when compared to 2021.

In December 2022, the number of final deeds of sale relating to residential property amounted to 1,003, a 28.8% decrease when compared to those registered a year earlier.

The value of these deeds totalled €225.1 million, 28.5% lower than the corresponding value recorded in December 2021.

Asked whether he was worried that this figure reflects the beginning of the property market bubble bursting he said: “We don’t agree with this comparison.”

He said that it is not right to compare December 2021 with December 2022, as December 2021 was the last month of the reduced tax and stamp duty schemes.

The scheme was first introduced as a temporary COVID-19 measure for promise-of-sale agreements.

The measure allowed property sellers to pay a reduced 5% rate of property tax and buyers to pay a 1.5% rate in stamp duty, on the first €400,000 of a property’s value.

Following this, the registration date of the final deed on property transactions eligible for reduced tax rates has been extended to June 2023.

He added that when comparing the month of December 2022 with previous months in 2022 and with December in other years, the outcome of these comparisons showed that “December was a normal month for sales.”

“For now there is no need to worry about any bubble.”

“At this stage, the majority of the property being built is sold. In fact, almost everything is being sold on plan. Very few are the properties that are not sold on plan,” he said.