The Importance of Real Estate in Malta


The role of the real estate sector in Malta’s economy is an undeniably important one and any property, whether a home is owner-occupied or rented out, is undeniably the main financial asset of many Maltese households. Transactions in real estate contributed to around 7.5% to the overall GDP in 2018 according to the Times of Malta. 

With a global slow-down in the market due to the pandemic for the first part of 2020, the local property market, in contradiction to other EU trends, gained substantial momentum during that time with the property price index having gone up by 5% for the rest of 2020. Nonetheless, the sector still faced a tough time back then and something had to be done to encourage property sales. 

The much needed relief came in the form of several government incentives, introduced to stimulate the overall market and to especially aid the real estate sector during this time. This move proved to be immensely successful as it spurred on many investors who had the liquidity to start buying again: property sales jumped back to previous pre-pandemic levels and started to improve even further. No-one can deny that it has proven to be a resilient industry, backed by strong consumer confidence and this was reflected in the amount of transactions registered right through the pandemic. We can all recall the press coverage this phenomenon received at the time.  

When we look at current property specifics, apartments in Malta and terraced houses in Malta prices both increased healthily while townhouses, villas and houses of character saw the biggest gains in recent times. When it comes to the present buy-to-let market, rental yields are averagely around 4.4%, far better than anything any of the major local banks have to offer; so it makes far more sense to invest in real estate for those that have spare cash lying around. 

Malta’s housing index stood at an average of 99.41 points for the years 2005 to 2022, but it is important to note that an all-time high of 139.52 points were recorded for the first part of 2022. It is thus fair to say that Malta real estate weathered yet another storm as property sales across Malta and Gozo exceeded all forecasts and expectations.

Towards the end of the second year of the pandemic, a massive shift in consumer perspective of what the home means, started to influence the market. Undeniably, money is always the overriding factor when it comes to buying any home, but the market changed from seeing a home primarily as a fiscal investment to investor’s decision-making being influenced by what more the home can bring in the form of lifestyle and other uses. 

Here we think for instance of the “work-from-home” culture and other hybrid work models that are definitely here for good. Having a suitable home that can accommodate this new way of working, plays a huge role when consumers decide on what home to buy. 

The introduction of facilitating first-time buyers to access affordable housing is also another strong factor that has emerged and the government’s addressing of this market’s needs has led to some great results. The original scheme introduced during COVID-19 that benefits first-time buyers has been extended till the end of 2022 and offers fantastic savings such as no stamp duty being applicable to the first €200,000 paid towards a property purchase. This has seen many young people moving into their first ever homes, something that seemed impossible before.

Market leaders and experts foresee a positive growth rate for house prices for the remainder of 2022, but at a more realistic and steady pace. With the government and leading estate agent’s pro-active attitude towards the market, many new incentives are also playing a role in promoting the acquisition of real estate. There is currently a strong focus by some of the new incentives to promote the preservation and restoration of historic properties, properties located in UCA, properties older than 25 years and even properties that have been vacant for 7 years or more. Further savings are available, applicable to certain types of properties that warrant refurbishing and upgrading, where the VAT can be claimed back on amounts spent on such upgrading. 

We can therefore see that real estate in Malta is an extremely important component when it comes to not only the entire economy, but also to all other related industries and ancillary services. This covers a huge spectrum: from artisans and craftsmen, builders, architects, notaries, surveyors, estate agents, plumbers and tilers, painters, suppliers of building materials, construction equipment such as cranes and even the state employees who form part of the entire property ownership process. 

Real estate is not simply about buying and selling: it is a vast economic ecosystem that is wide and far-reaching, one that touches the lives of countless Maltese, expats and tourists…and a very important one for this country. 

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