Malta's property market growth is slowing down, according to a new report by accountancy firm KPMG.

Demand for property is not growing at the same rate as in the last three years, according to most developers and real estate agents consulted for the Construction Industry and Property Market Report 2019.

Several operators however clarified that the industry was returning to regular levels of demand following a period of stronger than usual performance.

“A slowdown of property price growth is indicative of an environment whereby whilst demand is still outpacing supply, there is an element of catch up as more units come to markets," the report reads.

"This leads to a degree of lag while the market processes developments at a mainstream level,” the report reads.

The report, commissioned by the Malta Developers Association, was launched during an industry conference at the Excelsior Hotel in Floriana on Wednesday.

In his keynote address, Prime Minister Joseph Muscat, said the economy did not  depend solely on the construction sector for growth and that there was no property bubble looming.

 “Our economy is not growing on steroids,” he said. 

“It is my understanding that what we’re experiencing is the sustainable growth of our economy.

"The construction industry in Malta is growing because the economy is growing and not vice-versa. If it were that would be a first red-flag.

“There is no property bubble, there is no situation where we’re depending on one particular industry for growth.”

He outlined three sustainability safeguards: the instincts of industry professionals; the banks, who as a rule don’t allows unsound investments to move forward and the Government’s own policies.

Dr Muscat also warned against greed, saying it should be eliminated from all sectors.

“It’s in everyone’s interest that we keep growing and succeeding, but greed risks poisoning everything. It needs to be flushed from out system entirely."

The report also found that there was a lack of supply of rental properties priced at under €1,000 per month, with properties at under €600 per month being virtually non-existent.

Operators were of the opinion that mid-range rental properties, priced between €1,000 and €2,000 a month, were in excess supply and landlords generally kept the asking price high based on an incorrect perception on what rates the market found acceptable to pay.

In the high-end rentals section, demand was not performing well with some operators expressing concern that the completion of several upmarket developments may result in an oversupply, creating further strain on this category of properties.

The report found that, from a demand perspective, higher rents put pressure on employers to provide higher wages and negatively impact the standard of living.

“Looking ahead, if property prices continue to rise at the same levels, outpacing increases in income, some segments of society could be priced out of the property market, ending up in a much more difficult rental market,” the report's authors remarked.

Pricing and affordability were also found to be of some concern within the scope of the study.

Operators said the price of land has continued to increase and some even balked at the asking price of certain plots of land, claiming that the price point would have made it impossible to turn a profit.

Banks also expressed concern for affordability on the buyer’s end, noting that first-time buyers were finding it difficult to find affordable property.

Concern for low-income households was also raised as the probability of these families climbing the property ladder further becomes unlikely due to limited mortgage allowances becoming insufficient to purchasing habitable properties.

The report also cited rogue developers taking advantage of weak enforcement, fatal construction site accidents and excessive bureaucracy on the part of banks, making the market more difficult to access, as potential reasons for the slowdown.

In his address, Infrastructure Minister Ian Borg said it was a misconception that property was being built without a demand for it.

He continued to note that certain policies where not clear enough to provide operators with legal certainties that they required and would work to speed up the process of policy review.

“I believe the focus shouldn’t be on how one particular review board interprets policy, but policy should be clear enough for everyone,” Mr Borg said.

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