Two minimum income earners afford a maximum house price of around €145,000, report finds
A two-adult household based on two income earners on minimum wage afford a maximum house price of around €145,000, which falls significantly below the average market price for a finished housing unit of €260,000, Daniel Gravino, a Grant Thornton consultant said while presenting a report.
“This raises concerns on affordability and striking a better balance between affordability and environmental sustainability which can lead to more affordable and equitable housing options,” a statement about the report read.
The findings of the latest report, The Malta Property Market – A True Picture were presented by Gravino, during the launch of the latest update held at Trident Park in Mriehel. The Malta Property Landscape – A True Picture is an analytical report produced by Grant Thornton using Dhalia’s extensive property database and market development data. The first edition of this report was launched in June of last year.
“The latest release shows that when buying an environmentally sustainable apartment at €200,000 (which is energy efficient, reduces the cost of energy and for which a favourable green loan scheme is applicable) it can yield potential financial benefits to the tune of €43,700 over a 30-year period, 44% of which are realised within the first five years,” the statement read.
George Vella, Grant Thornton’s partner, said that Grant Thornton’s market knowledge and economic analysis expertise in combination with Dhalia’s extensive property database provide an economic perspective on the property market essential for policymakers, businesses and people investing in property alike, allowing them to make informed decisions.
Among other insights presented by Gravino, it was reported that during Q1 of 2023, although the housing price index remained at 9.8% higher than the average price that prevailed in 2019, it experienced a decline of 2.9% when both the Maltese property market and economy registered growth at a very fast pace. During the same period under review, rental prices remained relatively unchanged from 2022, suggesting that the recovery to pre-Covid19 rental prices has been sustained, a statement read.
“Furthermore, during Q1 of this year the number of final deeds, when compared to the same period of the previous year, was 9.4% less. On the other hand, the number of registered POS agreements increased by 14%. This trend is indicative of an expected increase in housing stock over the next two to three years, as units typically come onto the market with a time lag. Based on forecasts for the Maltese economy, it is estimated that the additional supply of housing units will exceed further demand for 2024 and 2025, thereby possibly applying a downward pressure on prices.”
“This release also features commercial property for the first time with a focus on commercial spaces, indicating that the development of office space works commenced between 2017 and 2022 will create more supply of office space than what is actually required to accommodate the registered increase in office-based employment.”
Minister Stefan Zrinzo Azzopardi who opened the event on the day, emphasised the importance of educating the consumer on the benefits of energy
efficiencies buildings. “It is of great importance that consumers are made more aware of the qualities and advantages of energy efficient buildings. Information is key. I firmly believe that estate agents have an important role to this effect. When promoting property on the market, it is high time that estate agents take an active role in promoting energy efficiency in buildings,” Minister Zrinzo Azzopardi said.
Gravino said that the latest figures show that there may be an oversupply of office space, especially when also taking into consideration that the demand estimates do not account for the growing trend of persons working from home.
“In part, this is also corroborated by the decline of 11% in the average rental price for offices between 2019 and 2022,” the statement read.
Commenting about the event, Alan Grima, CEO Dhalia, stated that by delivering comprehensive insights into Malta’s property landscape, we are committed to empower stakeholders to navigate the evolving market confidently. “With dedication, collaboration and transparency, our aim is to contribute to sustainable growth, fostering equitable communities and a thriving property industry for the future of Malta.”
The presentation of findings was followed by two panel discussions namely Financing the Future – Balancing affordability, energy efficiency and social responsibility and Redefining Malta’s Commercial Property Landscape – The challenges and opportunities in the commercial property market. The panels were composed of various specialists from the industry including APS CEO Marcel Cassar, Housing Authority CEO Matthew Zerafa, Best Deal director Erskine Vella, Trident Estates CEO Charles Xuereb, AX Real Estate Denise Xuereb, Valuation specialist Perit Justin Mizzi from Archi+, Grant Thornton’s partner Oriana Abela and manager Francesca Vella and Dhalia’s chairman Chris Grech and Branch manager Gordon Dalli. Both panels were moderated by journalist Keith Demicoli.