President of the Malta Developers Association (MDA) Michael Stivala expects real estate sales to hold strong through 2023, telling BusinessNow.mt: “It looks like there is going to be a positive year.”
Contacted for comment on a press release issued by the MDA on Wednesday, which highlighted the strength of Malta’s property sector and outlined the reasons for it, Mr Stivala says he does not know “where the doom and gloom communicated by sections of the media is coming from”.
Speculation about a potential property bubble has made headline in recent weeks following audit firm KPMG’s release of a report on Malta’s economic outlook in late January.
KPMG noted a number of upside and downside risks for the sector, and notably described a 22 per cent drop in promise of sale agreements signed during 2022 as being “of some concern”.
However, even when the trend was originally picked up in the first months of last year, stakeholders were quick to dismiss concerns, with Mr Stivala describing the drop as “a natural consequence of the end of a very attractive tax incentive” in December 2021.
The incentive related to the acquisition of property, which saw the stamp duty on property acquisitions reduced from 5 per cent to 1.5 per cent on the first €400,000 of the property value.
This applied to promise of sale agreements registered up to 31st December 2021.
Authorities’ efforts to stimulate the property market paid off, with 2021 seeing close to €1 billion additional deals being closed over the preceding year.
“When comparing the first months of 2022 to years in which the property market was ticking along without external impacts like the pandemic or incentives, the figures are broadly in line,” said Mr Stivala.
In fact, the 11,086 promise of sale agreements entered into by households in 2022, while far lower than the 14,209 signed in 2021, is actually more than the 10,670 and 10,496 signed in 2019 and 2020, respectively.
Mr Stivala had harsh words in response to KPMG’s January report, calling it “flawed analysis by some who are clearly detached from market realities”.
In further comments made on Thursday (today), he is no less aggressive, saying that both the report and media representations of it are “misunderstood and misleading”.
“When there are figures, they have to be well-interpreted,” he says.
Malta Developers Association statement
On Wednesday, the MDA issued a statement saying that “February has exceeded all expectations and has shown the resilience of the Maltese property market.”
The association touted Malta’s “favourable climate and lifestyle [for] contributing to its growing popularity as a relocation destination, and the positive outlook is expected to continue in the coming years.”
It said that a look at the Housing in Europe Report 2022 shows “why Malta and its property are so attractive”.
These include housing that is comparably one of the most affordable in the European Union, with only Lithuania’s housing average being more affordable than Malta.
“Malta’s housing cost, compared to the other EU member states, is the most reasonable when considering all expenses, including mortgage, rent and utility bills,” it noted, adding that Malta’s housing “is also environmentally friendly – only countries like Sweden beat Malta in being the most efficient in greenhouse gas emissions for heating and cooling.”
February real estate performance
February saw a staggering 29 per cent increase in the value of promise of sale agreements, for an increase of over €85 million over the same month of the previous year.
January and February 2023, the MDA said, saw an increase of €153 million over 2022.
It added that the First two months of the year accounted for 17 per cent of all sales for 2022.
The majority of the budget is dedicated to the adoption of electric vehicles
The company said the Government is engaging in ‘a legal tit-for-tat for purely political ends’
The study found that compensation, a work-life balance and flexible arrangements were top priorities for candidates