Advertised prices for Malta property have gone up for the first time in two years, returning to positive territory in March, according to the Central Bank of Malta’s quarterly review.
Data show that in the first quarter of this year, prices increased by 4.5 per cent when compared to a year earlier, the first upward movement in 24 months. This contrasts with a decline of 1.4 per cent in the previous quarter.
Property prices started to drop in the second half of 2007 and took a sharp downturn between December 2008 and March 2009, as the global recession bit deep. Since then they have continued to fall but at a slower pace and the market started to show signs of stabilising.
The Central Bank’s data, compiled from advertised prices, show the upturn in the first quarter was primarily due to higher prices being asked for apartments and the more luxurious dwellings such as villas, townhouses and houses of character.
Apartments, which constitute half of the properties in the bank’s sample, saw prices going up by 4.2 per cent on a year earlier. In the same period, luxurious houses, which make up a fifth of the sample, saw a substantial jump of 21.4 per cent.
In contrast, prices of maisonettes were broadly stable while those of terraced houses dropped slightly.
The bank said the number of advertised properties contracted by 1.3 per cent on a year earlier, while the number of building permits issued by the Malta Environment and Planning Authority fell by 40 per cent reflecting a substantial decline in the number of permits for apartments.
According to National Statistics Office figures published last month, which are based on actual transactions, the property price index rose by 0.38 per cent in the first quarter over the corresponding period last year, mainly as a result of rising apartment prices.
That increase was the first recorded by the NSO since the last quarter of 2008.
On the economic front, the Central Bank has indicated that the economy is expected to grow by 1.5 per cent this year and then accelerate moderately to 1.8 per cent next year.
However, the bank warned that projections were subject to “an unusually high degree of uncertainty” because of the volatile international environment.
Economic recovery, which began in the last quarter of 2009, gathered pace in the first quarter with GDP rising by 3.4 per cent over the same period last year.
Growth in the first quarter was driven by higher export activity and a strong accumulation of inventories. On the downside, private consumption growth moderated, while government consumption and investment fell.
The positive developments in the economy were not reflected completely in the job market with the bank describing the changes as “uneven”.
While employment grew in the first quarter, this was mainly within the part-time category as the number of employees in full-time jobs fell. At the same time, unemployment began to fall during the March quarter and declined further by May.
On the other hand, the downward trend in inflation came to an end in March, registering 0.6 per cent, up from the minus 0.4 per cent in December.
This was attributed mainly to energy prices as consumers started paying for higher water and electricity bills. Inflation continued its upward trend to 1.8 per cent in t he June quarter.
The deficit dropped to 3.3 per cent of GDP in March from 9.1 per cent a year earlier as revenue increased more rapidly than expenditure.
“Fiscal consolidation based on the reduction in expenditure has a more favourable impact on long-run economic performance than revenue-driven tightening,” the bank said, calling for “broader structural reforms”.
“Reforms should aim at increasing the degree of competition and labour force participation, especially among women,” the bank added.
Article supplied by timesofmalta.com