What Rental Price is the Right Price?
We have probably all been asked to give our opinion on a price. Be it on a car, a travel fare or a property. One subject that has got us hyped-up lately, is the prices of rental properties. Have you ever thought a rental price was too high for a property in a certain area? Or then again, how do you know if a rental property is a ‘bargain’? Well, if you know the answers to those questions, that’s probably because you are equipped with good-old, all-mighty knowledge and data. But has everyone got enough knowledge about the rental property market?
You cannot just decide if a property is cheap or expensive, if you do not have certain facts straight. You need to have an intuition in the rental industry, as well as a constant source of figures leading you to understand a little more about the market and particular localities. The next question is, who or what, gets this type of data daily and in abundance? A real estate agency of course!
After four years in the industry, estate agencies can confidently predict the market to a large extent, and provide a price-indication of rental properties on the market. In developing a pricing guide, actual data from our database is sourced from hundreds of transactions and an average for an area can be derived.
Constructing this platform is part of a wider project, in which we will apply more data to broaden the public’s knowledge of the market and offer more precision when it comes to pricing.
People need reliable statistics to get a better idea of the market. Real estate in Malta has recently seen a surge in estate agents, promoting property portfolios from existing or sprouting agencies across the country. This is due to an increase in rental demand, fuelled by a foreign workforce settling in Malta, locals leaving home for work or study, as well as socio-economic policies such as the IPP Programme.
In a world in which rent prices are getting higher, some property owners could be inclined to increase the price of their properties without taking much consideration about their real worth. This is an unjustifiable raise in price, as a pricing exercise should take in consideration many elements associated with a property. Sometimes, the area alone, such as the areas of St. Julian’s and Sliema, command a certain high price. But in other locations, such as Birkirkara, the area alone cannot retain a high price.
An apartment’s price is consequently rather affected by the demand in the area, it’s location in terms of transport commodity or proximity to amenities, the apartment’s level of finish and furnishing, as well as the number of utilities and appliances the property offers.
The pricing exercise is even further complicated when unjustifiably high-priced properties do get rented. This results in an erroneous increase in market prices and wrongly incites the mind-set that any property will rent at a high price.
These cases can be prevented when property agents intervene and try to correct prices, educating both owners and rental clients. Our aim is just that: to provide a guide from which people can compare prices of properties. They might be seeking a property to rent, or even searching for a property to sell or buy – as buyers will want to know the area’s rental prices.
We must have a learned society when it comes to real estate, flouting exploitation of prospective tenants and encouraging property owners to upgrade their properties. Renovation of properties is a positive result that can come out of this, as owners are forced to add value to their properties if they want to dictate a higher rental price.
Another optimistic result is that the market can better regulate itself, and rent prices can thus be better controlled and try to restrict rent rises to the inflation rate.