The number of concluded residential property contracts in Malta and Gozo fell by around 28 per cent during the first nine months of the pandemic year compared with the same period in 2019, according to mortgage-based data collated by the central bank.
The figure mostly reflected a lower-than-normal number of transactions in the second and third quarters.
The drop in Malta was stronger than in Gozo, standing at 30 per cent and less than 10 per cent respectively, the bank said.
The bank pointed out, however, that the data should be interpreted with caution because it includes only property purchases funded through borrowing from the banking system and not self-funded deals or those made through barter.
The central bank also pointed out the data was, therefore, not representative of the entire market for residential property and excluded a significant portion of sales.
The number of transactions in Gozo was very low and could be “more volatile” for this reason, it highlighted.
Similar to the central bank’s sources, National Statistics Office figures, which cover both mortgage-financed purchases of residential units and those financed without recourse to bank borrowing, show a double-digit fall in concluded contracts in the first three quarters of 2020.
They confirm that, despite some recovery in the number of sales in the third quarter when compared to the second, this remained below 2019 figures.
The national statistics office data shows similar year-on-year falls in contracts concluded in both Gozo and Malta.
Rebound seen
The central bank noted, however, that the information does not include promises of sale not yet concluded or data from the fourth quarter of 2020.
“The indications are that the amount of promises of sale increased significantly during the third and fourth quarters of 2020. If these deals are concluded successfully, they could result in a substantial increase in property transactions at the end of 2020 and the beginning of 2021,” the bank noted.
According to the Malta Developers’ Association (MDA), 13,867 promises of sale were signed between January and December last year, with sales in 2020 generating around €3 billion in turnover, matching the 2019 results.
Sales boomed in December, when 1,390 promises of sale were signed for a total value of €382 million, according to the MDA’s preliminary data.
Mortgage-based data also indicated that average apartment prices – the largest category – continued to rise during the first three quarters of 2020 although, in this case, growth was slightly stronger in Malta than in Gozo, the central bank said.
Its advertised house price index shows a modest year-on-year increase of around one per cent in the first quarter, followed by a contraction in the second, mainly reflecting less dynamic apartment prices.
However, the central bank said, the rate of inflation based on advertised prices turned positive again in the third quarter and picked up in the last quarter of the year, reaching five per cent.
Although, during the whole year, house price inflation averaged only 1.7 per cent, compared to 6.2 per cent in 2019, this mostly reflected developments in the first half of 2020.
The NSO’s property price index continued to increase, with the annual rate of change in the first three quarters of 2020 averaging 3.9 per cent, a slower growth than the six per cent recorded in the same period of 2019.
House price growth in Gozo has exceeded Malta since 2018, the central bank pointed out.