In a recent report on The State of the Construction Industry, the Building Industry Consultative Council in the Resources and Infrastructure Ministry referred to the demand for housing and the issue of property prices.
The report stated that, during 2003, the largest increase was seen in the price of semi-detached dwellings, which rose by a staggering 75 per cent from the previous year. The cost of one and two-bedroomed maisonettes increased by 30 per cent in 2003 and the price of terraced houses rose by 20 per cent over the preceding year.
No explanation has been published to explain or justify these price increases.
The public perception is that the property market is a runaway sellers’ market, which is out of touch with demand, and in danger of being overblown to the point where something has to give.
Breathtaking prices
The simultaneous publication of two property magazines, distributed free with two Sunday morning papers on 8 May, provided a graphic, if partial, account of the actual state of play in Malta and Gozo.
They advertised the sale of villas, maisonettes and apartments of all shapes and sizes, some with very attractive sea views. The quoted prices are breathtaking, to say the least.
A luxury penthouse in St Julian’s, with a swimming pool and an open view of Spinola Bay, is going for a cool Lm850,000.
A detached bungalow at l-Iklin has an asking price of Lm650,000. A detached villa at Madliena, a town house in Valletta and a penthouse in Tower Road, Sliema, each carry a price tag of half a million liri.
A luxury apartment overlooking Independence Gardens in Sliema costs Lm470,000 and a detached bungalow an Santa Maria Estate in Mellieha is being offered for Lm350,000.
What is described as “a superb plot of approximately one tumulo of land”, with a relative approved building permit, (never mind the additional cost for construction) is going for Lm350,000.
Comparative costs
How do these costs compare with those prevailing in other Mediterranean countries?
These are the top-notch prices advertised in these two publications. Others are less expensive but, nevertheless, very pricey. In one magazine, there are very many properties, scattered from Marsaxlokk to Marsascala, from Madliena to Attard, and from Gozo to Portomaso – all going for prices ranging from Lm250,000 to Lm500,000.
In the second magazine, there are more than l6 properties going for prices exceeding Lm300,000, more than double that number at prices ranging from Lm200,000 to Lm300,000 and whole pages of adverts, each asking for a price approximating Lm200,000.
Heady market
What makes the Malta property market so heady to the point of seeming intoxication? What justification is there for the steadily rising prices for property which, so often, lies vacant for some time after construction, without return to the seller?
From the scanty statistics published from time to time, it does not appear that there are enough taxpayers in these islands with sufficient income that will allow them to entertain the above-quoted prices. And while the price of property continues to soar, the property market is steadily distancing itself from the average Maltese citizen who wants to start a family and aspires to own his or her house.
The construction industry has passed through a busy phase and many building contractors prospered as a result. The banks, which were heavily involved in financing building projects, have every interest in seeing that the bubble is not overblown.
Meanwhile, while this fast-moving development was running its course, it is estimated that there are about 20,000 vacant premises all across the country, either because they are in a derelict state, or because of the reluctance of the owners to rent their premises under the restrictions imposed by the prevailing rent laws.
Accumulated problems
The accumulated problems associated with the property market are complex and have become urgent. Their economic, social, financial, employment and environment aspects must be coordinated at policy level – not merely to dispel wrong perceptions, but to introduce a sense of direction and stability to a market vital to Malta’s economy.
In saying all the above, I claim no expertise. I write from a layman’s point of view, hopefully reflecting the common man’s viewpoint, based on public observation of skyrocketing property prices, which are running far ahead of demand.
My purpose is to stimulate public discussion in the absence of overdue official action, and to engage the interest of the media beyond its stake in advertising revenue from this market.
We are fast approaching the point where “action this day” is an overriding imperative.
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