Real estate agents have confirmed that there is no impending burst of the property bubble, in spite of a decrease in the number of promise-of-sale agreements registered in 2022.
Figures published by the NSO last month show that there was a total of 12,177 promise-of-sale agreements signed in 2022, which is 3,462 fewer than the number signed in 2021.
This led to speculation that the property sector is encountering difficulties, which the Malta Developers Association (MDA) and the Estate Agents Section immediately shot down.
Property bubbles burst when high supply and increasing prices aren’t matched by a concomitant level of high demand; as prices soar, there’s nobody to buy, so prices plummet.
Michael Stivala, head of the MDA, recently told this media house that there are no indications that the property bubble is bursting. Malta has seen a constant rise in the price of buying and renting property in the past years.
Asked about the 22% reduction in promises-of-sale, Stivala had said that the government’s tax and stamp duty schemes, which ended in December 2021, led to a surge in promises-of-sale towards the end of that year. He said that a comparison between the sales figures for the years of 2021 and 2022 therefore made no sense and, when properly contextualised, cries about property bubbles lost their force.
The head of the Estate Agents Section, Michael Bonello, also made reference to the government scheme which ended in December 2021 to explain the slump in the promise-of-sale agreements. Bonello went on to say that “while there is persistent talk of a ‘property bubble’ from various quarters who may be motivated to push this narrative, our experience on the ground is that there is no credible sign of this happening any time soon”.
Various real estate agencies contacted by The Malta Independent on Sunday are on the same page as Stivala and Bonello.
Niki Casolani, one of the directors of Belair Property, stated that since “Malta sees an average of about 14,000 sales a year and 2021 saw a big spike due to incentives offered”, then it’s only “normal for a dip after that slight spike”.
Daniel Debono, director of Excel Homes, said that he “100% agreed with Michael Stivala’s article”. He went on to say that when you’re “benchmarking statistics, one needs to take into perspective the current scenario, in relation to the different incentives impacting performance in the previous years”.
Bernard Mangion, director of Ben Estates, said that he was in “total agreement with Stivala”, going on to state that in 2022, the company “managed to sell more property than the previous year, and January 2023 was better yet than the year before that”.
While acknowledging the fact that increasing prices make it harder for first-time buyers to integrate themselves in the market, Mangion also said that he didn’t believe prices will increase or decrease in the coming years so long as unemployment remains low.
Altogether, Mangion believed that there was no impending property bubble.