The COVID-19 pandemic affected not only property sales but also brought down the asking price for more than two-thirds of advertised properties, a new study had found.
The new in-depth report on the Maltese property market, compiled by property portal Djar and audit firm EY Malta, revealed that property prices were on a downward trend in all areas in Malta but not in Gozo, where property prices had increased.
Data was compiled from information about 90,000 residential properties, recorded over the past three years and based on online listings by local estate agents, collected on a regular basis to reflect real-time price fluctuations.
Real estate is believed to be one of the worst-hit sectors characterised by cancelled physical viewings due to social distancing, fear and movement restrictions, investors’ lack of appetite to finalise transactions and the challenge of securing loans as banks withdrew a number of approved sanction letters.
The report found that 69 per cent of properties advertised at a lower value in the first quarter of 2020 compared with the last quarter of 2019. This is almost double the 38 per cent in the 2018-2019 report.
Its findings stand in stark contrast to anecdotal information provided by estate agents in May, who had said that many sales had been postponed but that the market was "encouraging".
According to the report, whilst the South-Eastern and Southern Harbour regions experienced a slowdown in growth, Northern, Northern Harbour and Western regions experienced an overall minor reduction in value.
The study indicates that property prices growth came to a near standstill during the first quarter of this year, with an average price change of -0.16% being recorded over the previous quarter.
When weighting value changes by property price, the observed slowdown is further pronounced. All regions in Malta showed average price declines over 2019 and the first three months of this year. This implies that, on average, higher-priced properties experienced a larger percentage price drop.
Just over half the properties which remained listed between the first three months of 2019 and the first three months of this year, saw an increase in advertised prices, except for properties in Gozo which for the major part recorded increases in value. Overall, just 51% of analysed properties registered an increase in value. Data for earlier periods shows that in preceding years, the majority of properties had registered an annual price increase.
Gozo holds strong
Djar CTO Keith Galdies said: “This downward shift started in the last quarter of 2019 – due to changing demands, an increase in supply, and prolonged political uncertainty that dented Malta’s reputation with foreign investors – has been further compounded by the coronavirus.”
"While Madliena, Senglea and Valletta witnessed the greatest decrease during the first quarter of this year, properties in Gozo – considered as a region for the purposes of this study – saw a slight overall increase in prices of 0.2 per cent over the last quarter of 2019."
The bloated prices of the past three years have meant that properties take longer to sell, with the average duration of housing listed on the market being as high as 370 days; just over a year. This report, which focuses on the virus’ disruptive impact on the real estate lifecycle, is just a snapshot of the data available on the Djar platform, which has been collecting tens of thousands of web-based listings since January 2017 to gain the first comprehensive overview of the property market in Malta, he said.
The Northern Harbour region, which includes Birkirkara, Gżira, Pietà, St Julian’s and Sliema, has the highest supply with about 17,200 properties listed on the market. These properties also hold the highest price per square metre for both houses, which sell at about €3,200 per square metre, and apartments which can fetch €3,000 per square metre. In Gozo, the average price per square metre is €1,475 for apartments and €1,906 for houses.
The lowest supply is in the Western district – Attard, Rabat, Lija, Dingli, Żebbuġ – with just 4,500 properties up for grabs in the area.
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