Malta is already one of Europe’s top vacation, language-learning, and retirement destinations, and it’s becoming a popular place to buy real estate.
The COVID-19 pandemic had a significant impact on Malta’s real estate market and the nation’s economy, just like it did on the rest of the world.
Malta’s housing market, however, began to pick up steam again in the second half of 2020 after slowing down in the first half. According to the Central Bank of Malta, the property price index increased at an average annual rate of 5.3% during the first three quarters of 2021 and 5% during 2020 (4.8% inflation-adjusted), following increases of 2.5% in 2019, 11.9% in 2018, and 8.8% in 2017. (CBM).
Market circumstances
Malta’s property market is relatively inexpensive in comparison to other European countries and competing locations, allowing people to find what they are looking for at a reasonable price.
The property market in Malta experienced an incredible boom between 2000 and 2009, owing to extremely low-interest rates and the relaxation of building height requirements, followed by a sharp decline in recent years due to the global financial crisis. In 2008, for example, over 6,000 building permits were issued, whereas less than a thousand were issued in 2012.
Although most large villas with a terrace, pool, and/or tennis court are still quite expensive, most apartments and maisonettes with a view have dropped in price. Property prices in Malta fell slightly during the economic downturn, but remain relatively high, as on most Mediterranean islands.
Buying a property in Malta
Malta is well known for its Mediterranean climate, its rich history, and its stunning landscapes, with its mild winters and hot summers. Malta continues to be an idealistic island to buy an apartment or a house, whether you’re looking for a modern apartment or a house with character. Malta is full of property-buying opportunities.
To give you a general idea, the starting price for a typical three-bedroom house would be €350,000, and the price range for a typical three-bedroom apartment would be between €140,000 and €400,000. Of course, these costs will change depending on the location and particulars of the property. However, it’s not surprising that prices can soar if you’re looking for a very opulent property.
Buying property in Malta has several restrictions
Unfortunately, Malta has a lot of restrictions on home ownership. Foreigners and residents of the EU are typically only permitted to purchase one home in Malta, and then usually only for owner-occupancy. However, they are permitted to purchase additional homes in “specially designated areas” like Tigne Point, Portomaso, Cottoenra, Manoel Island, and Chambray.
Only properties owned by foreign nationals that are over €233,000 in value, have swimming pools, and are registered with the Hotel and Catering Establishments Board are permitted to be rented out. Only short-term leases may be used to rent out foreign-owned properties.
As a result, purchasing multiple properties in Malta for rental income can be challenging, but the restrictions are less onerous when purchasing a vacation home abroad.
The mortgage market growth during the pandemic
Due to low and stable interest rates, Malta’s mortgage market expanded significantly from 40.3% of GDP in 2019 to 45.8% of GDP in 2020. Total housing loans outstanding in February 2021 Significantly increased year over year by 7% to reach €5.92 billion (US$7.15 billion).
From 2010 to 2020, the average annual growth rate for housing loans was 8.1%, which was a decline from the average annual growth rate of almost 13% between 2006 and 2009.
According to EMF’s Hypostat 2020 report, the current average loan-to-value ratio is 76%.
Bank of Valletta plc and HSBC Bank Malta plc control 71% of the domestic retail market in Malta, which is dominated by mortgage lending.
