Everyone is talking doom and gloom in the Maltese property market, yet property sales are still growing. The real estate market has just changed, and perhaps for the better.
The rise in property prices in 2005, 2006 and 2007 were unjustified increases created by vendors, who were just being too greedy. Naturally, many investors who were hard hit in the stock market and decided to diversify their investments by purchasing property did not help. This sudden demand created a fake economy that was bound to burst. It was just a matter of time.
Normally, banks and financial institutions increase their interest rates to stop this type of inflated economy, but in reality they too were enjoying incredible profits, so their decision was to be cautious but go with the flow and enjoy it while it lasted.
The government did not help either. The timing to slow down this positive attitude in the country was not favourable and election was close, so it also decided to go with the flow and hang on. But how has this affected us? Where do we stand today?
Many ask the same questions. ‘Have property sales decreased over the last couple of years?’ Of course they have. ‘Has property gone down in value?’ Of course it has, but in reality the decrease in value is justified and certainly could have been much worse.
Iceland is a perfect example of what a country can go through when one allows unjustified increases in property value. Dubai and Bulgaria are going through similar situations, because supply is much larger than demand.
Architects and real estate professionals need to be careful to give precise valuations and not just try to satisfy vendors by giving them values they want to hear. I have often been asked by clients to give a fair valuation, and on entering a property vendors blurt out the sum they expect to sell it for.
The first quarter of 2009 has shown a rise in the number of sales in upmarket properties in good areas, such as villas, bungalows and seafront luxury properties, and also a decline in sale prices in the first-time buyer sector, two trends that indicate that the property market is slowly stabilising itself, since higher-value properties are always the first to smoothen the curve.
Hopefully, this momentum will continue. However, more importantly, to benefit from this new wave of buyer activity, it is imperative that properties are marketed properly and at a competitive price.
Property sales at auctions are doing well. There are a substantial number of first-time buyers looking for a home and we have seen a large numbers of extremely wealthy foreigners seeking property in Malta due to favourable tax rates.
The government should keep pushing such attractive incentives. One silly law is that a foreigner is only allowed to purchase one property, unless it is located in a designated area. Foreign investment has kept Malta alive for centuries, and a wealthy foreigner wishing to invest in Malta should be made welcome.
Analysing market trends, one notes that potential investors now deem the market to be at its lowest point. Lower bank interest rates are spurring renewed activity among buyers, who previously adopted a wait-and-see attitude. These factors could well represent a sudden release of constrained demand. Moreover, vendors are listing homes at fairer and more competitive prices, which consequently leads to an increase in viewings and more offers.
At the auctions, we have seen an increase of serious vendors. These might want to buy a larger home or invest in a business or are just looking for early retirement. The point is that the real estate market in Malta is still going strong. There might be an abundant amount of apartments, but the demand for good value property is there.
A few Maltese investors are turning to Sicily, England and Spain to invest their savings. They believe the grass is greener on the other side. I wonder how quickly one can now sell a property in Bulgaria or an apartment in Dubai.
Buying property in Malta and Gozo has always been a sure investment; it’s just a matter of time. Unlike other countries, we do not suffer the drastic fluctuations of property market value because we have always invested in our own homes.
We are not accustomed to rent but to buy, and because land is extremely limited, the value of property will always be a secure investment, especially if we think positively and invest wisely.
Courtesy of www.timesofmalta.com