The standard Maltese family is being priced out of the property market, a study has found.

The study by KPMG found that households on a median income could only take out a mortgage which financed 76% of the median asking price of apartments. 

In monetary terms, that means such households could only afford to buy an apartment costing €201,000, while the median property costs €265,000.

The study defined an average-priced apartment as a three-bedroom property without a view, located in either the central, southern or north-western regions.

It calculated median national income as being €16,858 a year.

According to KPMG, a typical three-bedroom apartment with no views in the central, north-west and southern regions was priced at €265,000, up from €254,000 a year earlier, while a typical penthouse was priced at €380,000 up from €354,000 in 2020. 

The study found that things were even worse in 2020: that year, households earning the median income could only qualify for a mortgage worth 73% of the median property value. 

Analysts noted that while apartments seem to be becoming more affordable, people are being priced out of the market for maisonettes and penthouses.  

Different factors will impact affordability, the analysts acknowledge: if just one person takes out a mortgage, rather than two people jointly, affordability plummets by 48 per cent. 

Extending mortgage terms to 40 years from the average of 26.7 bumps affordability up by 28 per cent. But even if mortgage lengths were extended to 40 years, it would not be enough for all median-income households to afford median-priced properties.  

A change in interest rates would also impact affordability: analysts calculated that raising rates by 0.5% would reduce affordability by 6.1 per cent.  

Other key findings from the report: 

• 85% of approved property permits were for apartments 
• First-time buyer tends to be 33 years old 
• Weaker demand for commercial office space, driven by a shift towards a hybrid working. This could lead to a potential oversupply in the coming years, especially if FDI is not strong enough
• Government property schemes were found to be critical in bolstering demand during the pandemic
• The pandemic caused a shift in consumer behaviour, with buyers seeking more open spaces and home-office space
• Industry operators observed a dramatic increase in transportation and raw material costs during 2021 and 2022
• In the short-term, small developers are likely to be worst hit by the supply crisis
• The long-term view is that property prices will rise to accommodate these cost hikes
• Dumping costs for construction waste have reached “dramatic levels” as the lack of space remains a critical concern
• Issues with dumping of construction waste likely to persist, leading to ever rising dumping costs and the proliferation of illegal dumping