Property prices in Malta are falling, after a short-lived surge in the first half of 2010. Malta’s overall house price index dropped by 2.61% over the year to Q1 2011, according to the Central Bank of Malta. When adjusted for inflation, house prices actually fell 5.04% over the same period.
The start of 2011 has been rough for some property owners in Malta:
• Apartments saw a 1% nominal price increase over the year to Q1 2011 but their prices actually fell by 1.5% when adjusted for inflation.
• Maisonettes dropped by 0.2% (-2.7% in real terms) during the year to Q1 2010.
• Terraced houses fell in value by 6.1% (-8.5% in real terms) over the year to Q1 2011.
• “Other houses”, which consisted of townhouses, houses of character and villas, experienced the largest price drop of 12.8% (-15% in real terms) over the year to Q1 2011.
The situation looks somewhat troubling from a residential investor’s perspective – there’s been overbuilding, there are a lot of empty dwellings, and gross rental yields are low (between 3.3% and 3.9%).
In 2010, the total number of new dwelling permits rose by 20.8% to 1,499, according to the Malta Environment and Planning Authority. Yet in 2010, the economy grew by 3.65%, and in 2011 real GDP growth is expected to be 2.5%.
From 2000 to 2007, Malta’s overall house price index rose by 78.9% (53.4% in real terms). Over the same period:
• Terraced houses saw the largest price increase of 105.3% (76% in real terms)
• Apartment prices rose by 83.3% (57.1% in real terms)
• The prices of maisonettes increased by 81.4% (55.5% in real terms)
• The prices of townhouses and villas rose by 71.9% (47.4% in real terms)
However, property prices started to fall in 2008 due to the global financial meltdown. The overall price index dropped by 2.7% (-7.1% in real terms) in 2008 and by 5% (-6.7% in real terms) in 2009 before rising slightly by 1.1% (-0.9% in real terms) in 2010.
There are many restrictions on property ownership in Malta. Foreign nationals and EU citizens can only buy one property in Malta, and usually only for owner-occupancy. But they can buy more properties in ‘specially designated areas’ such as Tigne Point, Portomaso, Cottoenra, Manoel Island, and Chambray.
Properties owned by foreigners can be rented out only if the property is valued over €233,000, it has a swimming pool, and it is registered with the Hotel and Catering Establishments Board. Foreign-owned properties can only be rented out for short-term lease agreements.
The start of 2011 has been rough for some property owners in Malta:
• Apartments saw a 1% nominal price increase over the year to Q1 2011 but their prices actually fell by 1.5% when adjusted for inflation.
• Maisonettes dropped by 0.2% (-2.7% in real terms) during the year to Q1 2010.
• Terraced houses fell in value by 6.1% (-8.5% in real terms) over the year to Q1 2011.
• “Other houses”, which consisted of townhouses, houses of character and villas, experienced the largest price drop of 12.8% (-15% in real terms) over the year to Q1 2011.
The situation looks somewhat troubling from a residential investor’s perspective – there’s been overbuilding, there are a lot of empty dwellings, and gross rental yields are low (between 3.3% and 3.9%).
In 2010, the total number of new dwelling permits rose by 20.8% to 1,499, according to the Malta Environment and Planning Authority. Yet in 2010, the economy grew by 3.65%, and in 2011 real GDP growth is expected to be 2.5%.
From 2000 to 2007, Malta’s overall house price index rose by 78.9% (53.4% in real terms). Over the same period:
• Terraced houses saw the largest price increase of 105.3% (76% in real terms)
• Apartment prices rose by 83.3% (57.1% in real terms)
• The prices of maisonettes increased by 81.4% (55.5% in real terms)
• The prices of townhouses and villas rose by 71.9% (47.4% in real terms)
However, property prices started to fall in 2008 due to the global financial meltdown. The overall price index dropped by 2.7% (-7.1% in real terms) in 2008 and by 5% (-6.7% in real terms) in 2009 before rising slightly by 1.1% (-0.9% in real terms) in 2010.
There are many restrictions on property ownership in Malta. Foreign nationals and EU citizens can only buy one property in Malta, and usually only for owner-occupancy. But they can buy more properties in ‘specially designated areas’ such as Tigne Point, Portomaso, Cottoenra, Manoel Island, and Chambray. Properties owned by foreigners can be rented out only if the property is valued over €233,000, it has a swimming pool, and it is registered with the Hotel and Catering Establishments Board. Foreign-owned properties can only be rented out for short-term lease agreements.
Analysis of Malta Residential Property Market »
RENTAL YIELDS
Last Updated: Mar 30, 2011
The prices of smaller not-new apartments in Malta has fallen, and they now sell for around €2,200 per square metre, while larger apartments sell for around €2,845 per square metre. Yields have therefore improved somewhat for smaller apartments.
All the same, gross rental yields on prime location apartments in Malta remain low, at between 3.3% and 3.9%.
All the same, gross rental yields on prime location apartments in Malta remain low, at between 3.3% and 3.9%.
TAXES AND COSTS
Last Updated: Aug 05, 2011
Rental Income: Net rental income is taxed at progressive rates, from 20% to 35%.
Capital Gains: Capital gains are generally taxed at a flat rate of 12%, levied on the transfer value or the selling price of the property.
Inheritance: There are no inheritance taxes in Malta, but there is a transfer duty payable by the heir at 5% of the declared property value.
Residents: Resident citizens are taxed on their worldwide income at progressive rates. Resident foreigners are liable to tax only on their income sourced in Malta.
Capital Gains: Capital gains are generally taxed at a flat rate of 12%, levied on the transfer value or the selling price of the property.
Inheritance: There are no inheritance taxes in Malta, but there is a transfer duty payable by the heir at 5% of the declared property value.
Residents: Resident citizens are taxed on their worldwide income at progressive rates. Resident foreigners are liable to tax only on their income sourced in Malta.
BUYING GUIDE
Last Updated: Jul 01, 2008
Roundtrip transaction costs ranges from 6.8% to 25.8% of property value. The buyer usually pays for the stamp duty (3.5% - 5%). Seller pays 5% real estate agent commission (plus 18% VAT) if the buyer is found through the services of a Registered Real Estate Agency. The seller also pays 12% Capital Gains Tax if the property is held for more than 5 years. For properties held for less than 5 years, there is an option of paying progressive rates at a maximum of 35% of net gains.
Non-residents can only sell their properties in Malta to Maltese citizens. They can only sell to other foreign nationals if they cannot find a buyer who is either a Maltese citizen or an EU citizen.
Non-residents can only sell their properties in Malta to Maltese citizens. They can only sell to other foreign nationals if they cannot find a buyer who is either a Maltese citizen or an EU citizen.
LANDLORD AND TENANT
Last Updated: Jul 18, 2006
Maltese rental market practice is pro-landlord.Rents: Rents and rent increases can be freely negotiated, except for rental agreements entered before 1st June 1995.
Tenant Eviction: Maltese law operates extremely slowly. Hugh Peralta & Associates estimate that a contested eviction could take between 690 and 1,915 days, and the enforcement of a judgment to collect rent could take even longer.
ECONOMIC GROWTH
Last Updated: Aug 31, 2011
Modest economic growth in 2011
Malta’s economy grew by an average of 4.85% annually from 2007 to 2008, according to the IMF. However in 2009, the economy contracted by 3.39% due to the global financial meltdown.
Malta’s economy recovered quickly, with a real GDP growth rate of 3.65% in 2010. This past year’s expansion was supported by a recovery in exports, and to a lesser extent by higher final domestic product. Private consumption and investment also improved.
In the first quarter of 2011, Malta’s annual GDP growth was 2.3%. In 2011, the economy is projected to grow by a modest 2.5%.
Malta’s overall unemployment rate was 6.8% in 2010. The seasonally-adjusted unemployment rate fell to 6.2% by end-Q1 2011, the lowest since Q4 2008, according to the CBM. In 2011, unemployment is expected at 6.4%.
Malta’s inflation rate was 2% in 2011. In July 2011, the inflation rate increased to 2.5%, according to the CBM. Consumer prices are projected to rise by 2.6% this year, driven by price increases of industrial goods.
Malta’s economy recovered quickly, with a real GDP growth rate of 3.65% in 2010. This past year’s expansion was supported by a recovery in exports, and to a lesser extent by higher final domestic product. Private consumption and investment also improved.
In the first quarter of 2011, Malta’s annual GDP growth was 2.3%. In 2011, the economy is projected to grow by a modest 2.5%.
Malta’s overall unemployment rate was 6.8% in 2010. The seasonally-adjusted unemployment rate fell to 6.2% by end-Q1 2011, the lowest since Q4 2008, according to the CBM. In 2011, unemployment is expected at 6.4%.
Malta’s inflation rate was 2% in 2011. In July 2011, the inflation rate increased to 2.5%, according to the CBM. Consumer prices are projected to rise by 2.6% this year, driven by price increases of industrial goods.
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