What is the upshot of the property price increase in Malta over the past two years?
We’ve been hearing a lot about how the property and rental market has been on a serious upswing over the last couple of years. This has led to some understandable concern among buyers, and even otherwise disinterested observers are keen to see how soon this ‘boom’ will turn to ‘bust’.
But if recent projections by independent evaluators are anything to go by, the property market in Malta appears to be on an enthusiastic trajectory that won’t be letting up anytime soon.
According to Eurostat, Malta actually recorded the highest quarterly increase in house prices in the last quarter of 2015 – with 6.2%, it topped Ireland (4.5%), Austria (4.1%), and Sweden and the United Kingdom, both of which recorded 3.9%.
Internally, during the first quarter of 2016 prices for maisonettes and terraced houses rose by 13.6% and 19.6%, with apartments remaining stable at 7.8% while prices of villas, town houses and houses of character rose by 7.7% when compared to 2015.
Healthy figures to be sure, but what are some of the main reasons behind them?
1. The Individual Investor Programme
Known by most as the ‘sale of citizenship’ scheme, the initially controversial move by government to sell Maltese passports to wealthy investors under the Individual Investor Programme (IIP) is clearly having an impact on Malta’s property scene. Since those interested in buying a Maltese passport have to not only fork out a substantial amount for the passport itself – but also guarantee an investment in Malta, property appears to be the go-to investment of choice.
2. Foreign workers
With sectors like igaming more than doing their bit to keep the Maltese economy afloat – incidentally, the credit agency Standard & Poor’s confirmed Malta to be one of the fastest-growing economies in the Eurozone earlier this year – it’s natural that this professional arrangement, being of an international dimension, will lead to a rise in demand for property from foreigners willing to settle here in the long-term.
3. Stamp duty exemption
But it’s not all about foreigners. Thanks to a scheme announced as part of Budget 2016, first-time property buyers were exempted from the 3.5% stamp duty applicable on the first €150,000 of the property – a scheme whose deadline was extended up to September of last year. And it’s understandable that the offer was a resounding success, since financial relief is often a top priority for those scrambling together enough money to purchase their first home.
With these factors in place, it’s therefore clear to see that putting your property out there right now might just be a good idea. With the IIP attracting a good number of ‘high net worth’ individuals and sectors like igaming supplying an even steadier flow of prospective buyers, this also ensures that the economy is confident enough to empower local buyers too.