How’s the property market?
If there is one thing I can say about the current market, it’s that it is easily identified as a buyer’s market. I am against the latest notion that the property market has declined during the recession. Certain areas of the property market have remained and will always remain strong: the first time buyer’s market, people who are starting a new life together and so on. In fact, these sales are moving at a fast pace since they have decreased in price, but this in turn led to an increase in transactions. To top it off, banks are offering extremely good rates so it’s an added plus for anyone investing in their own property.
On the other hand, the middle market properties (priced between €250,000 to €500,000) have slowed down a bit. As with everything, there are exceptions. Properties that are of good quality and finished properly will sell easily. If you add the fact that it is priced properly, it can sell within 90 days of going on the market. The upmarket property market remains strong, despite the fact that we have seen a reduction in clients due to the introduction of the new high network scheme. Those that are finished to a higher standard sell quicker, especially when they are fully furnished since this saves the buyer the added hassle of furnishing the property.
On the whole, I think the recession has done something good for the Maltese market. We were passing through a phase where several parts of Malta were being developed and new buildings were going up everywhere, most of which were not finished well and therefore remained on the market for longer than usual. Now we can safely say that those are being sold off and anyone developing a project today is ensuring that it is finished to high standards. However, I would advise anyone to be cautious and look over the shoulder of the people doing the work. If you are working with the right architects, designers and suppliers, you’ll see the difference in the end-product – you can easily end up with a fantastic property that is easy to sell or rent.
When it comes to price shifts, I think we can safely say that the lower-end property market has seen an average reduction in price of between 10% and 15%. Middle range properties have dipped by about 5%, whereas upmarket properties are seeing an increase. Prices differentiate from one locality to the next; the Sliema and St Julian’s areas are always in high demand, including surrounding localities. On top of this, seaside areas are also quicker to sell.
If we move away from sales, the rental market is stronger than it has ever been, feeding the lower end market in the main touristic areas. Clients are achieving between 4% and 8% rental returns and there is evidence to prove this. Nowadays, several people are buying to invest (especially locals) since it is a big opportunity. You can buy property at a good price, get it financed with a low interest rate and top it off with a good rental return. As the saying goes, cash is king.
Other than that, the standards have already improved, in every aspect – from A to Z, to the lower, middle and high end brackets of the market. We did have the problem of having to deal with an oversupply of property, especially if you were looking at Malta and Gozo combined, but over the past three years, we’ve worked hard to reduce that oversupply and have successfully reduced this by quite a substantial amount. I can foresee a steady future for the Maltese property market.
Kevin Buttigieg is Managing Director of Remax Malta.