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Last Updated: Jul 10, 2013




During the year to end-Q1 2013, Maltese property prices fell by just 0.6% (-2.42% inflation-adjusted), based on figures released by the Central Bank of Malta (CBM). On a quarterly basis, property prices rose by 1.54% (3.28% inflation-adjusted) in Q1 2013.

By property type:
  • Terraced house average prices rose 4.1% (2.2% inflation-adjusted) y-o-y in Q1 2013
  • Apartment prices dropped 2.4% (-4.1% inflation-adjusted) y-o-y in Q1 2013
  • Maisonettes rose 2.3% (0.5% inflation-adjusted) during the year to Q1 2013
  • Townhouses and villas increased by 4.9% (3% inflation-adjusted) y-o-y in Q1 2013

From 2000 to 2007, the Maltese property market enjoyed strong growth, with the overall house price index rising by 78.9% (53.4% inflation-adjusted). Over the same period:
  • Terraced houses saw the largest price increase of 105.3% (76% inflation-adjusted)
  • Apartment prices rose by 83.3% (57.1% inflation-adjusted)
  • Maisonettes prices increased by 81.4% (55.5% inflation-adjusted)
  • Townhouses and villas rose by 71.9% (47.4% inflation-adjusted)

However, property prices started to fall in 2008 due to the global financial meltdown. The overall house price index dropped by 4.3% (-9% inflation-adjusted) in 2008, 1.4% (-1.1% inflation-adjusted) in 2009 and another 2% (-4.4% inflation-adjusted) in 2010. After a short-lived recovery in 2011, house prices fell again by 2.2% (-5% inflation-adjusted) in 2012.

Residential construction remains depressed. The total number of new dwelling permits, an indicator of the health of the construction sector, plunged 17.3% in 2012 to 958 permits from a year earlier, the lowest level since 2003, according to the Malta Environment and Planning Authority.

The Maltese economy expanded by 1.6% in real terms in the first quarter of 2013, making it the best EU performer during the period, according to the National Statistics Office (NSO).

Despite this improving economic outlook, the property market is expected to remain weak for the rest of the year, according to the CBM.

Malta house prices 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 15, 2014



Rental yields in Malta are about the same this year as last year, after a period of increase.

Investment apartments in the favourite expatriate areas such as Sliema, St. Julians and Swieqi are now more affordable have average prices per square metre of around €2,750 to €3,500. In these areas, one can expect to earn an average rental return of around 3.4%.

Frankly, these are not great rates of return.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Mar 27, 2014



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.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Mar 28, 2014



Roundtrip transaction costs ranges from 6.68% to 25.58% of property value. The buyer usually pays for the stamp duty (1% pre-paid stamp duty, and 4% remaining stamp duty). Seller paysreal estate agent commission at 1% to 5%, plus 18% VAT. The seller also pays 12% Capital Gains Tax.

Nonresidents 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.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: Jul 18, 2006



Malta residential apartment  blocksMaltese 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.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Jul 10, 2013


Malta: improving economy, low inflation

Malta gdp inflationMalta, with a total population of 417,000, was the smallest of ten countries which joined the European Union (EU) in May 2004. It joined the eurozone in 2008. The archipelago of Malta includes the islands of Malta, Comino, Comminotto, Gozo and Filfla.

The Maltese economy expanded by 3.5% annually from 2005 to 2008. After contracting by 2.6% in 2009 due to the global crisis, the economy bounced back strongly with real GDP growth rate of 2.9% in 2010 and another 1.7% in 2011. In 2012, the economy expanded by a meagre 0.8%, mainly due to the eurozone debt crisis.

The Maltese economy expanded by 1.6% in real terms in the first quarter of 2013, making it the best EU performer during the period, according to the National Statistics Office (NSO). The country’s GDP reached €1,654.8 million in Q1 2013, up 3.7% from the same period last year.

The country’s real GDP growth is projected to be 1.4% in 2013 and 1.9% next year, mainly driven by domestic demand and government investment, such as the construction of a new gas-fired plant and liquid gas facilities in Delimara commences, according to the CBM.

The government deficit widened to 3.3% of GDP in 2012, up from 2.8% of GDP in a year earlier. The government is committed to bring down the deficit to below 3% of GDP in 2013, but the EU has forecast that the deficit will increase to 3.7% of GDP this year.

In March 2013, the seasonally-adjusted unemployment rate in Malta stood at 6.5%, up from 6.3% the previous year - one of the lowest levels in the euro area. Unemployment rate is projected to fall slightly to 6.4% in 2014, according to the CBM.

Inflation slowed sharply to 0.9% in April 2013, down from 2.6% in the same period last year.







  • Pro-landlord rental market
  • Low to moderate transaction costs
  • Low yields
  • Significant ownership limits
  • High rental income tax
  • Weak economic performance
RESIDENTIAL PROPERTY FACTS
Price (sq.m): €2,748 For a 120 sq. m. property, usually an apartment.
Rental Yield: 3.23% For a 120 sq. m. property, usually an apartment.
Rent/month: €888 For a 120 sq. m. property.
Income Tax: 17.78% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 16.13% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 12.00% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice.

Baltic property back! Q1 2014 - NewsecBaltic States Capitals 2014 - Ober HausScandinavia Property Report Q4 2014 - Newsec
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