In order to get a good picture of the year ahead for Malta real estate, let’s look at what went down in 2023 first:
During 2023 Malta's real estate market was characterised by continued price growth.
According to globalpropertyguide.com Malta’s residential property price growth during the year to Q2 2023 saw the nationwide property price index rise by 8.3%. This follows the year-on-year increases of 10.51% for Q1 2023, 2.71% for Q4 2022, 5.16% for Q3 2022, 1.71% for Q2 2022 and 1.66% in Q1 2022, with the website’s accredit source for these figures being the Central Bank of Malta. In fact, it was the second-strongest growth recorded since Q1 2019!
This growth was driven by a combination of factors such as a strong demand from foreign buyers, a shortage of supply in certain property types and favourable, low interest rates.
When we look at the overall market for the past year, the number of residential property transactions declined somewhat in the first three quarters of 2023, however, residential construction activity continued to increase. According to globalpropertyguide.com the total number of approved new dwelling permits for Q2 2023 increased further by 9.5% from a year earlier. We are keeping an eye on the release of the latest statistics and will report back in a follow-up article during the year.
The Maltese government extended most of its cost saving measures and incentives in the 2023 budget to continue the stimulation of the local property market. These measures included a waiver of stamp duty for first-time buyers, a VAT refund on restoration works, tax free transfers for properties in Urban Conservation Areas, and more.
The outlook for Malta's real estate market in 2024 is another positive one. The government's measures are expected to continue to stimulate demand and the shortage of supply is likely to influence prices upwards. Overall, Malta's real estate market in 2023 was a true seller's market. The pace of growth for 2024 is likely to be similar or possibly more moderate.
The most noticeable and positive factors that will exert influence in 2024 include:
- Economic growth: According to the website sovereigngroup.com the autumn forecast of the European Commission (which was issued on 15 November 2023), states that Malta can look forward to register some of the strongest economic growth amongst all of the EU member states. This amounts to 4% and we believe it will continue to support demand for both residential and commercial property.
- Low interest rates: Mortgage interest rates are expected to remain relatively low, making it more affordable for people to buy homes. This is especially encouraging for first-time buyers.
- Continued demand from foreign investors: Malta is a popular destination for foreign investors, who are attracted by its stable economy, low taxes and high quality of life. This has a positive influence on property prices overall.
- Extended government measures: The Maltese government has implemented a number of measures during 2021/22 to support the real estate market, including tax incentives for first-time buyers and grants for the purchase of older-type properties and most of these have been extended for 2024 during the last budget speech.
Some potential challenges that could affect the market in 2024 include:
- Rising construction costs: The cost of construction materials are always on the rise, which could put upward pressure on property prices.
- Supply constraints: There is a shortage of available land for development in Malta, which could limit the supply of new homes and drive up prices.
Other trends that are expected to impact the Malta real estate market in 2024:
Growth in the rentals market: The rentals market is expected to remain strong, as demand for rental properties continues to outstrip supply. This is likely to benefit investors who are looking to generate rental income.
Increased demand for luxury properties: There is a growing demand for luxury properties in Malta, as wealthy individuals seek high-end homes in a safe and secure environment. This is likely to drive up prices in this segment of the market. When we look at the socio-economic factors and political instability in many other parts of the world, one can understand why wealthy individuals prefer to invest in luxury Malta property, especially when it is coupled with the path towards residency and citizenship.
Increased focus on sustainable development: The Maltese government is placing a renewed and stronger emphasis on sustainable development, which is leading to a growing demand for energy-efficient and environmentally friendly homes. This trend is likely to continue in 2024.
To end off our brief synopsis of what we see for 2024, Malta's real estate market is thus very likely to remain dynamic and competitive and investors who are prepared to adapt to the changing landscape should find plenty of opportunities in this exciting real estate market.
Our experienced and senior property consultants at Homes of Quality are true experts in the field of exceptional real estate in Malta. If you are on the lookout for high-end properties that are unique and stand out from the rest, give us a call.