Property is more affordable today than it was in the 1980s, according to a local architecture firm.
Comparing housing affordability scores from 1982 to last year shows property in Malta is now more affordable than it was 40 years ago, architecture and property valuation firm DHI Periti said in a report.
“The housing affordability index improved from 77 up to 98 [comparing 1982 to 2023] for a three-bedroom apartment,” the firm said in a report titled ‘40 Years of Housing Affordability in Malta’.
“This signifies that a household nowadays affords to purchase its residence, while in 1982 only three-quarters of a residential property was affordable.”
The housing affordability index (HAI) is a metric used by estate agents in the US which measures to what extent an average household can afford a typical home. Values under 100 mean property is less affordable while those above indicate it to be more affordable.
The firm attributed the “improved affordability” to mortgage rates decreasing from 8% to 2.67%, mortgages being extended from 25 to 40 years and banks asking for a less of a deposit upfront.
“A greater burden occurred in 1982, as the deposit to be paid on the house purchase price stood at 20%, as compared to 10% nowadays”, it said, noting further reductions were also available for first time buyers including waivers on stamp duty up to the first €200,000.
However, while pointing to the HAI as indication things were now easier for those looking to buy, the company acknowledged property prices had ballooned over the years, multiplying by 16 times the levels seen in 1982. Wages, meanwhile, had risen by only seven times, it said.
Contacted for comment, DHI Periti founding partner Denis Camilleri said today’s market was a “better time” to buy a property, stressing that although house prices had risen, it was important to take the “long-term picture” into account.
“It is a better time [to buy a property]; our wages were much lower in the 1980s... It’s more affordable but more stressful and people don’t seem to have enough time,” he said, warning some buyers could be rushing into purchases.
Calling property a “long-haul investment”, the architect also hit out at reports that property prices in Malta had doubled over the past five years, saying such assertions ignored house prices remaining stagnant the five years before then. Camilleri did not specify to which reports he was referring.
Referencing a Times of Malta Money Coach article in December, when a 25-year-old prospective buyer asked if it was still worth investing in property due to its “disheartening” rises in price, DHI Periti urged youngsters to get on the property ladder as quickly as possible, pointing to higher repayments for mortgages of a shorter duration.
Meanwhile, in November, a report from accountancy giant KPMG said young single people on an average income were unable to afford 95% of properties on the market.
It said a buyer in their late 20s earning a wage of €21,000 – roughly the national average – could only afford to buy a property worth up to a maximum of €171,000.