There is a total of Lm25 billion worth of property in Malta.

It is a staggering figure that was revealed by Professor Joseph Falzon during a seminar entitled Real estate, opportunities and challenges for the future, held last week.

There is no doubt that the cost of property in Malta has sky-rocketed over the past decades, and especially in the recent past, as was confirmed by the statistics given by Prof. Falzon, who said that whereas in 1980 the average property price was just under Lm20,000 per unit, this had doubled to Lm40,000 in 1996 and leaped to Lm100,000 last year.

It is therefore no wonder that Prof. Falzon estimated that the value of property in Malta has risen to Lm25 billion.

A lot of the property that is “owned” is still being paid for, and even here the figures are astounding. In 1994, house loans amounted to Lm100 million but, in just 13 years, these have multiplied to reach Lm800 million.

The fact is that today many people are opting to buy property, rather than rent, as they understand that, in the end, it is better to own a flat, an apartment, a maisonette or a house, even if this might take them 25, 30 or 40 years to repay their loan from the bank. It turns out better in the end than having spent the equivalent of a fortune in rent with nothing to show for it except accommodation that one does not own.

Old-fashioned rent laws discouraged owners from renting out their property, and more recent changes to the legislation do not seem to have reversed the trend that much. On the other hand, as time passed it became clear that people were preferring to buy property, and this pushed prices up. The more demand there was, the more the prices went up, which is what the markets do.

The fact that Malta is a small island and that space is limited, while the population continues to grow, making the country one of the most densely-populated in the world, also helped push up the prices.

But then comes a contradiction. This is because the prices of property continue to grow – and many people have seen in this phenomenon a form of investment that is worth taking up – and at the same time the number of vacant dwellings is quite high.

Twenty-three per cent of property in Malta is not inhabited and yet we continue to build new property.

Logic would say that, with nearly one-fourth of built dwellings uninhabited, the price of property would fall. But this is not the case in Malta. And the reason for this could be that those 23 per cent of “empty” residences are not empty at all – in the sense that they are a second residence, mostly a summer residence for people who switch houses, depending on the season.

The question is – for how long can we sustain such a spiralling trend in the price of property?

Many will answer that the increased cost of property is already having a negative effect on society, with many couples having to have two full-time and two part-time jobs in order to pay their debts on the property they bought before they were

married.

Others will argue that so long as the Maltese continue to buy property at the going rates there is no chance that the price will come down. Prices will start falling only when properties remain unsold.

Then there are those who believe that the price of property will never go down, especially now that Malta is a European Union member and it is therefore much easier for foreigners to set up residence here – particularly elderly people who come here to retire. The fact that these foreigners have more money to spend – and real estate agents know this – means there will never be a slowdown.