For many years, the Maltese rental market was constrained by rental regulations. In the years preceding 1995, the Maltese property market witnessed excess property demand. This required property owners to either rent out their vacant property at below-the-market prices or else sell their property. Many lessors followed the second course of action, resulting in a higher tendency for lessors to sell their property rather than rent.
It was only upon the liberalisation of the market in 1995 that rental prices started to increase, as the lessor and the lessee could negotiate and hence influence, the price of the rented property.
Developments in the rental prices that prevailed in this liberalised market since 2013, are captured by the Rental House Price Index. This Index represents the fruits of Grant Thornton’s collaboration with Dhalia real estate agency. It is the only publicly available source of information on rental prices that spans more than five years.
Over a seven-year period up to 2019, rental prices increased by 60 per cent. To put things in perspective, a property that rented at €500 per month in 2013H1 would be rented at €800 in 2019H2. During this period, particularly in 2016, a huge wave of foreigners moved to Malta to seek employment. They mainly sought out temporary residence and/or long-term lets, contributing to the growth in the Index.
Index is expected to further recover
The COVID-19 impact on rental market prices is evident. Before the pandemic, the Rental Price Index peaked at 160 in 2019 H2, followed by a consistent decline up to 2021H1 where the Index fell to 134, representing a drop of 16 per cent. This was the result of the national lockdown and subsequent restrictions which were brought about by the pandemic. In 2021 H2, rental prices started to recover. Six months later, rental prices were still 10 per cent lower than the pre-COVID-19 level.
All in all, the Index is expected to further recover in line with the general economic growth. In fact, more recent data covering May and June 2022, shows that rental prices have continued to increase.
Kristina Pisani, economic advisor at Grant Thornton
The ‘Malta property landscape: a true picture’ is a biannual publication bringing together Dhalia’s high-quality data on the real estate market and the analytical expertise of Grant Thornton. The report provides in-depth analysis and timely information on developments in the Maltese property market to allow policymakers, businesses and people investing in property to make informed choices. For more information on the report please visit https://www.grantthornton.com.mt/malta-property-landscape
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