Malta was less affected by the economic crisis than other EU countries, the European Construction Sector Observatory said in a country report on the island, noting that between 2008 and 2013, the number of construction companies increased by 15.4% to 3,623 and the number of real estate companies increased by 13.5% to 1,408.

Construction productivity recorded similar growth, up by 16.6% between 2008 and 2014. Figures for 2013 also show significant growth compared to 2008. Construction sector turnover was up by 12.7% to €1.1 billion and gross operating surplus was up by 40.3% to €312.5 million.

This growth was achieved in spite of rising construction costs, which increased by 8.3% between 2008 and 2015.

The housing market boom between 2000 and 2007 saw house prices increase by 78.9%. The market was relatively unaffected by the economic crisis, with the house price index declining by just 4.3% in 2009. The modest decline was subsequently reversed with the index growing by 8.6% over the 2009-2015 period.

Low mortgage interest rates and increases in disposable income are the main factors that are driving the demand for housing. Nonetheless, supply is some way behind demand.

There was decline in the number of building permits issued between 2007 and 2013, followed by a 45.8% increase between 2013 and 2015, reaching 3,947 in 2015.

To tackle the supply shortage, government schemes are available to support access to housing and housing supply, including a grant scheme to encourage first-time buyers to build their first home. The government has also launched a €50 million investment plan to build new social housing, as well as various measures to reduce the high number of unoccupied homes.

The outlook for the Maltese construction sector is expected to be positive, with growing investment in housing and non-residential construction in the coming years. A growing national economy, rising domestic demand and improved business confidence are expected to underpin the sector’s growth.

The European Construction Sector Observatory uses regular analysis and comparative assessments to inform European policymakers and industry stakeholders on the market conditions and policy developments in the European construction sector.

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