Sources in the property market have confirmed last week’s story in TMIS that the property market is in a state of crisis.

Notaries who handle many sale contracts have told this paper that there is a spate of cancellations of promises of sale (konvenji).

It would seem this stems from fears in the property market that property prices are not rising sufficiently for them to make a profit, that banks are holding back on credit for property deals and that the number of purchases of property have fallen sharply.

As a result, there is what some have even called “a panic wave” in the market as people seek to sell and find no takers. There is, as a result, a glut of unsold property on the market, while some entrepreneurs or property speculators are finding it is more advantageous for them to engage in property deals in countries such as Bulgaria and Macedonia.

The few that are purchasing property are doing so mostly for speculative reasons, such as to buy a house in order to pull it down and erect a block of flats instead. Few, however, are the real end-users in the market, certainly not young couples, who are scared by the high property prices they are finding.

Some, like Alternattiva and also inside Mepa, have argued in favour of taxing unused property.

But the GRTU’s Vince Farrugia is dead against this. The present system of government taxation with regard to property, says Mr Farrugia, comes into effect whenever property changes hands. Introducing a tax on unused property would, he claims, create even more disruption in the sector.

Mr Farrugia’s suggestion is to introduce a simple withholding tax and tax relief for those who rent property. This, he says, would create a soft landing for a property sector in crisis.