Malta's Residential Property Market Analysis 2025

Malta’s residential property market remains on a strong growth trajectory, amidst increasing transactions supported by fundamentally robust domestic demand, record-high tourist arrivals, and a surge in the number of foreign workers in the country. Also, residential construction activity is now improving. These positive trends are reinforced by the country’s strong economic growth.

Table of Contents

• Housing Market Snapshot
• Demand Highlights
• Supply Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

In the third quarter of 2025, the nationwide property price index in Malta increased by 6.88%, following year-on-year growth of 5.19% in Q2 2025, 2.15% in Q1 2025, 6.92% in Q4 2024 and 4.08% in Q3 2024, based on figures released by the Central Bank of Malta. When adjusted for inflation, property prices in the country were up by 4.39% over the same period.

Quarter-on-quarter, nationwide property prices were up slightly by 0.7% (0.86% inflation-adjusted) in Q3 2025, its fourth consecutive quarter of price increase.

Malta's house price annual change:

Note: Malta House Price Index / Quarterly (National)
Data Source: Central Bank of Malta.

Here are the changes in real estate prices by property type during the year to Q3 2025:

• Apartment prices rose by 4.9% compared to a year ago, on average, an acceleration from year-on-year increases of 1.3% in Q2 and 0.3% in Q1. When adjusted for inflation, prices were up by a more modest 2.46%.
• Maisonette prices increased by a moderate 3.06% y-o-y in Q3 2025, following annual increases of 2.5% in Q2 and 7.7% in Q1. When adjusted for inflation, prices were up by a meager 0.66%.
• Terraced house prices fell by 2.16% in Q3 2025 from a year earlier, in stark contrast to y-o-y increases of 2.1% in Q2 and 3.3% in Q1. Prices declined by a bigger 4.44% in real terms.
• "Other houses", consisting of townhouses, houses of character, and villas, experienced an average price decline of 7.23% y-o-y in Q3 2025, following y-o-y growth of 6.9% in Q2 and 5.8% in Q1. In real terms, prices were down by 9.39%.

Before the COVID-19 pandemic, property prices in Malta had been rising annually, registering a cumulative growth of 75% (62% inflation-adjusted) from 2012 to 2019.

After declining by 2.4% (-2.58% inflation-adjusted) in 2020 due to a fall in demand caused by pandemic-related restrictions, property prices in Malta bounced back again in recent years, rising by 6.94% (4.73% inflation-adjusted) in 2021, by a more modest 2.71% (-4.26% inflation-adjusted) in 2022, and by 7.54% (3.71% inflation-adjusted) in 2023, and by another 6.92% (4.98% inflation-adjusted) in 2024.

The sustained increase in residential property prices in recent years has been underpinned by several factors, including government schemes that support property demand, such as incentives for first-time and second-time buyers, purchases of properties located in Urban Conservation Areas (UCAs) and in Gozo, as well as refund schemes for restoration expenses, according to the Central Bank of Malta's Q4 2025 Quarterly Review. The recovering tourism sector, coupled with the increase in migrant workers in the country, is also supporting property price growth.

"Residential property prices in Malta continue to be supported by a number of Government schemes supporting demand for property, including the first-time and second-time buyers' schemes, the purchase of properties located in Urban Conservation Areas (UCA) and in Gozo, as well as refund schemes for restoration expenses. Moreover, a dynamic tourism sector and continued migrant worker flows continue to support demand for accommodation and hence, property prices," said the central bank.

Demand continues to strengthen. During 2024, the total number of residential property transactions in the country rose by 3.7% y-o-y to 12,598 units, following annual declines of 15.3% in 2023 and 0.3% in 2022, according to figures from the National Statistics Office of Malta (NSO). Likewise, the total transaction value increased by 8.4% y-o-y to €3.53 billion (US$4.14 billion) over the same period, following a slight annual contraction of 1.2% in 2023 and a modest increase of 4.2% in 2022.

The upward trend continues this year. In the first three quarters of 2025, the number of residential property transactions rose by 4.6% y-o-y to 9,788 units, while transaction value was up by 13.4% to €2.89 billion (US$3.39 billion).

With increasing demand, residential construction activity is now improving. During 2024, the total number of approved new dwelling permits in Malta rose by 7.4% y-o-y to 8,716 units, following a decline of 15.5% in 2023, a strong increase of 26.7% in 2022, and annual declines of 3.3% in 2021, 37.2% in 2020, and 3.1% in 2019, according to figures released by the NSO.

Then in the third quarter of 2025, the total number of dwellings for which permits were issued surged by a huge 110.3% to 3,668 units as compared to just 1,744 units in the same period last year.

Malta's economy has been growing robustly in the past several years, as economic activity returns to pre-pandemic levels. The country registered real GDP growth rates of 13.3% in 2021, 4.3% in 2022, 6.8% in 2023, and 5.9% in 2024, fully offsetting the 3.4% contraction seen in 2020. The robust growth was driven by a rebound in domestic demand and export of services, benefiting from the recovery in tourism. Before the pandemic, the economy had been growing strongly, with an annual average growth of 6.2% from 2012 to 2019, based on IMF figures.

In the third quarter of 2025, the country registered an annual growth rate of 3% as compared to a year earlier, following year-on-year expansions of 2.8% in Q2 and 3.6% in Q1, buoyed by strong household consumption and external trade, according to the NSO.

With this, the Maltese economy is expected to remain fundamentally healthy in the medium term. The European Commission expects Malta to post an economic growth of 4% this year, 3.8% next year, and 3.5% in 2027. The International Monetary Fund (IMF), on the other hand, released an economic growth forecast for the country of an annual average of 3.9% this year and in 2026.

The Central Bank of Malta's latest growth projections are not significantly different, expecting the domestic economy to grow by 3.9% this year, 3.5% next year, and 3.3% in 2027.

Demand Highlights:

Property demand continues to recover

During 2024, the total number of residential property transactions in the country rose by 3.7% y-o-y to 12,598 units, following annual declines of 15.3% in 2023 and 0.3% in 2022, according to figures from NSO. Likewise, the total transaction value increased by 8.4% y-o-y to €3.53 billion (US$4.14 billion) over the same period, following a slight annual contraction of 1.2% in 2023 and a modest increase of 4.2% in 2022.

The decline in demand in 2023 was partly due to the expiration of the temporary COVID-19 measures in September 2022, which provided for a reduced tax and duty rate of 5% and 1.5%, respectively, on the first €400,000 (US$468,500) of property transferred inter vivos. Fortunately, demand in the residential real estate market has been picking up again since last year, amidst the country's strong economic growth.

In Q3 2025, both the number and value of residential property transactions increased strongly by 12.9% and 25.8%, respectively, as compared to a year earlier.

In fact, in the first three quarters of 2025, the number of residential property transactions rose by 4.6% y-o-y to 9,788 units, while transaction value was up by 13.4% to €2.89 billion (US$3.39 billion).

Despite this, there are wide regional variations in property demand in the first three quarters of 2025:

• In the Southern Harbour, which includes the localities of Valletta, Il-Birgu, L-Isla, Bormla, Ħaż-Żabbar, Il-Fgura, Floriana, Il-Kalkara, Ħal Luqa, Il-Marsa, Raħal Ġdid, Santa Luċija, Ħal Tarxien, and Ix-Xgħajra, the total number of residential property transactions rose by 4.7% y-o-y to 1,523 units.
• In the Northern Harbour, which consists of the localities of Ħal Qormi, Birkirkara, Il-Gżira, Il-Ħamrun, L-Imsida, Pembroke, Tal-Pietà, San Ġiljan, San Ġwann, Santa Venera, Tas-Sliema, Is-Swieqi, and Ta' Xbiex, transactions were up by 5.3% y-o-y to 2,825 units.
• In the South Eastern District, which consists of the localities of Iż-Żejtun, Birżebbuġa, Il-Gudja, Ħal Għaxaq, Ħal Kirkop, Marsaskala, Marsaxlokk, L-Imqabba, Il-Qrendi, Ħal Safi, and Iż-Żurrieq, residential property transactions increased strongly by 11.9% y-o-y to 1,392 units.
• In the Western District, which includes the localities of L-Imdina, Ħaż-Żebbuġ, Is-Siġġiewi, Ħ'Attard, Ħal Balzan, Ħad-Dingli, L-Iklin, Ħal Lija, Ir-Rabat, and L-Imtarfa, residential property transactions were up by a huge 14.7% y-o-y to 1,008 units.
• In the Northern District, which includes the localities of Ħal Għargħur, Il-Mellieħa, L-Imġarr, Il-Mosta, In-Naxxar, and San Pawl Il-Baħar, residential property transactions declined by 3.1% y-o-y to 1,797 units.
• In Gozo and Comino, which includes the localities of Ir-Rabat, Għawdex, Il-Fontana, Għajnsielem and Comino, L-Għarb, L-Għasri, Ta' Kerċem, Il-Munxar, In-Nadur, Il-Qala, San Lawrenz, Ta' Sannat, Ix-Xagħra, Ix-Xewkija, and Iż-Żebbuġ, the number of residential property transactions increased slightly by 0.2% y-o-y to 1,243 units.

Buying property in Malta has several restrictions

Unfortunately, there are many restrictions on property ownership in Malta. Foreign nationals and EU citizens can usually only buy one property in Malta, and usually only for owner-occupancy, though they can buy more properties in specially designated areas such as Tigne Point, Portomaso, Cottonera, Manoel Island, and Chambray.

Properties owned by foreigners can be rented out, but only if it resides in a special designated area, it is a villa, or it has a licence from the Ministry of Tourism under the ‘superior’ and ‘comfort’ category.

Here are the specially designated areas:

• Portomaso, St Julian’s
• Cottonera Development, Cottonera
• Manoel Island/Tigne Point, Tigne/Gzira
• Tas-Sellum Residence, Mellieha
• Madliena Village Complex
• Smartcity
• Fort Cambridge Zone, Tignè
• Ta’ Monita Residence, Marsascala
• Pender Place and Mercury House Site
• Metropolis Plaza, Gzira
• Fort Chambray, Ghajnsielem
• Kempinski Residences, San Lawrenz

Thus, buying several properties in Malta for rental income can be complicated, but for buying a summer house abroad, the restrictions are not too severe.

Becoming a resident in Malta: Residency by Investment

The Government of Malta has established structured pathways for non-EU nationals seeking long-term residence or citizenship through significant economic contribution. Over the past decade, these frameworks have evolved considerably to respond to regulatory requirements, market conditions, and European Union legal standards.

In November 2020, Malta introduced the Maltese Exceptional Investor Naturalisation (MEIN) policy, replacing the former Malta Individual Investor Programme (MIIP), with salient differences being:

• Contribution: €600,000 for the standard residency route (36 months) and €750,000 for the expedited route (12 months), instead of €650,000

For dependents, the required contribution under the new policy is €50,000.

• Donation: the compulsory donation to an NGO has been raised to €10,000 from €5,000 previously.
• Residential property: the threshold for purchasing a property is raised to €700,000, from €350,000. However, the threshold for rental property remains unchanged at an annual rent of €16,000. The property needs to be held for 5 years from the issuance of the certificate of citizenship.
• Government bonds: the requirement to invest in government bonds is removed.
• Due diligence fees: for main applicants, due diligence fees increased to €15,000 from €7,500; for dependents, they also increased to €10,000 from €3,000-€5,000.
• Maximum age threshold: the maximum age threshold for dependents is raised to 29 from 27. Also, dependents who meet the legal definition of 'disability' can form part of a parent's application, regardless of age.
• Application for residence: all adult dependents are required to apply for residence, not just the main applicant. The non-refundable prepayment increases to €10,000, from €5,000 previously. There is also a €5,000 fee for the main applicant.

Under the MEIN, the number of citizenship certificates issued to principal applicants (i.e., excluding dependents) was capped at 400 every year, and 1,500 for the duration of the policy.

However, a significant policy shift occurred in 2025 following a ruling by the European Court of Justice, which resulted in Malta discontinuing the acceptance of new applications under its citizenship-by-investment framework. Consequently, the MEIN programme is no longer open to new applicants, and Malta has redirected its focus toward merit-based naturalisation and residency-linked investment schemes.

In this context, the Malta Permanent Residence Programme (MPRP) has emerged as the country's primary investment-based residency pathway. Between 2024 and 2025, the programme underwent substantial reforms to enhance transparency, regulatory compliance, and market alignment.

• Applicants are now required to demonstrate qualifying assets of either €500,000, including at least €150,000 in financial assets, or €650,000 with a minimum of €75,000 in financial assets.
• Property thresholds have been standardised nationwide, with a minimum purchase price of €375,000 or a minimum annual rental value of €14,000, eliminating previous regional distinctions between Malta and Gozo.
• Government contributions and administrative fees under the MPRP were revised upward, with the total administrative fee now amounting to approximately €60,000, payable in stages throughout the application process.
• Dependency rules were also refined, maintaining the maximum age of 29 years for financially dependent children, while exempting spouses, minor children, and dependents with disabilities from additional administration fees.
• Reduced fees apply to other eligible dependents.

A notable enhancement introduced in 2025 is the availability of a one-year renewable temporary residence permit, allowing applicants and their families to reside in Malta while their permanent residence application is under assessment. Furthermore, qualifying property owners may, subject to regulatory conditions and holding periods, lease or sublet their properties, adding flexibility to the investment requirement. Oversight of the programme has been strengthened through the centralisation of agent licensing and regulation under the Residency Malta Agency.

The enhanced Malta Permanent Residence Programme now represents the country's principal route for high-net-worth individuals seeking long-term residence, reflecting a policy direction that balances economic contribution, housing market considerations, and compliance with European Union standards.

Supply Highlights:

Residential construction activity improving again

During 2024, the total number of approved new dwelling permits in Malta rose by 7.4% y-o-y to 8,716 units, following a decline of 15.5% in 2023, a strong increase of 26.7% in 2022, and annual declines of 3.3% in 2021, 37.2% in 2020, and 3.1% in 2019, according to figures released by the National Statistics Office of Malta (NSO).

By property type:

• Apartment permits, which accounted for approximately 86.5% of the total dwelling permits approved, increased by 7.4% y-o-y to 7,543 units in 2024, after dropping by 15.1% in 2023 and increasing by 28.4% in 2022.
• Maisonette permits were up by 10% y-o-y to 783 units during 2024, following an annual contraction of 21.8% in 2023 and an increase of 23.3% in 2022.
• Terraced house permits were down by a modest 3.1% y-o-y to 283 units last year, following a decline of 12.3% in 2023 and an increase of 14.8% in 2022.
• For other types of houses, permits rose strongly by 30.5% y-o-y to 107 units in 2024, after increasing by 7.9% in 2023 and falling by 23.2% two years prior.

Then in the third quarter of 2025, the total number of dwellings for which permits were issued surged by a huge 110.3% to 3,668 units as compared to just 1,744 units in the same period last year.

The Northern District registered the biggest year-on-year growth in Q3 2025 of a spectacular 233.6%, followed by the South Easter District (210.6%), Northern Harbour (78.9%), Southern Harbour (68.8%), Gozo and Comino (56.1%), and Western District (41.3%).

Rental Market:

Rental yields are low to moderate

Gross rental yields in Malta are low to moderate, averaging around 4.05% in Q2 2025, from 4.08% in Q4 2024 and 3.66% in Q2 2023, according to research conducted by the Global Property Guide.

The highest-yielding areas for apartments are mainland Malta, Gozo, and St. Julian's, with gross rental yields averaging 4% or more.

In other areas such as St. Paul's Bay, Valletta, Mellieha, Qawra, and Sliema, yields do not exceed 4%.

More specifically, by major locations:

• In mainland Malta, apartments offer rental yields ranging from 3.63% to 4.29%, with an average of 4.03%.
• In Gozo, gross rental yields ranged from 3.86% to 4.25% in Q2 2025, with an area average of 4.07%.
• In Sliema, apartments offer very low rental returns, ranging from just 1.75% to 3.03%, with an average of approximately 2.24%.
• Valleta offers one of the lowest rental yields in Malta, ranging from just 1.15% to 2.46%, with an average of 1.72%.
• In St. Paul's Bay, the gross rental yields of apartments ranged from 3.51% to 3.74% in Q2 2025, with an area average of 3.63%.
• In Mellieha, rental yields ranged from 2.91% to 3.6% in Q2 2025, with an average of 3.34%.
• In St. Julian's, apartment rental yields ranged from 3.65% to 4.44% in Q2 2025, with an average of 4.04%.
• In Qawra, rental yields ranged from 3.46% to 4.09% in Q2 2025, with an average of 3.77%.

Round-trip transaction costs are rather high in Malta.

Free market rents continue to rise, albeit at a slower pace

The residential rental market continued to recover from the trough reached in Q4 2020 during the onset of the COVID-19 pandemic, with advertised residential rents now higher by approximately 28% as compared to their average in recent years.

Malta's rent price index:

Note: Malta's Rent Price Index, % change 1 yr (2015=100)
Data Source: ECB.

Despite this, rent growth is noticeably moderating. In the second quarter of 2025, rents increased by around 2% to 3% from the same period last year, buoyed by the continued increase in tourists and foreign expat workers, according to the Central Bank of Malta's Quarterly Review Q4 2025. This is a sharp slowdown from the double-digit year-on-year rent growth recorded from the second half of 2021 to 2024.

"The annual rate of change of advertised rents collected by the Bank from internet sources moderated in the second quarter of 2025. The range of estimates from various methods indicates that rents have increased at annual rates of between 1.5% and 2.9% in the quarter under review. Compared with previous quarters, the range of estimated rent inflation is narrower," said the central bank in its Q4 2025 Quarterly Review.

"In the quarter under review, the level of advertised rents was around 28% higher than its average in recent years," added the central bank.

Tourists and foreign workers continue to buoy the rental market

According to survey results conducted by the Central Bank of Malta in 2024, only 10% of tenants in the country are Maltese, with the shares of EU and TCN tenants standing at 17% and 74%, respectively.

The total number of foreign workers in Malta increased strongly by more than 19% y-o-y to a new record 115,721 people in 2023. This followed annual increases in the number of foreign workers in the country of 26.9% in 2022, 8.6% in 2021, 3.4% in 2020 and 22.3% in 2019. Then, in Q3 2024, foreign workers reached 122,187 people, with the number of foreigners in employment rising for all types of occupation.

Currently, the number of foreign workers in the country is estimated to have further increased to approximately 125,000 to 130,000 individuals.

Foreign workers, particularly third-country nationals (TCN) and those from other EU countries, accounted for more than 90% of tenants in Malta.

Active registered rental contracts in Malta stood at 47,879 in 2023, up by 24% from a year earlier, according to a recent report published by the Housing Authority titled The Private Rental Market in Malta. About 95% of active contracts are for long-term leases (i.e. duration of at least one year).

The number of rental contracts continued to surge in the past two years. By the end of the first half of 2025, there were 70,589 active rental contracts in the country, up by 7.5% from the same period last year. This suggests sustained demand in the rental housing market.

However, Malta's rental market has a peculiar composition - only 10% of rental properties are rented at market prices, the rest being in the subsidized sector.

Most Maltese traditionally prefer to own property rather than rent. However, in recent years, the country's owner-occupancy rate has shown a noticeable decline. In 2024, the nationwide homeownership rate fell to 68.1%, down from 74.7% in 2023, 82.6% in 2022, and 81.9% in 2021. It is now the lowest level seen in recent memory and is at par with the 68% recorded in 1995. In fact, it is now lower than the EU-27 average of 68.4% in 2024, according to Eurostat.

Before the pandemic, rents had been rising strongly in Malta, thanks to the increasing number of foreign workers, who mostly live in rented accommodation. Tourism, which increased by 10% annually from 2013 to 2019, and the introduction of the MIIP in 2013, increased rental demand further. However, in 2020, tourist arrivals plummeted by 76.1% to just 658,600 people, according to the Central Bank of Malta. With a lack of demand, rental rates dropped by double-digit figures.

With the easing of pandemic-related restrictions, the tourism sector started to show improvements in 2021, with the total number of tourist arrivals rising by 47% y-o-y to 968,100 people. In 2022, tourist arrivals reached 2.28 million, more than double the prior year's figure but still below the record 2.75 million tourists who visited Malta in 2019. In 2023, tourist arrivals surged by another 30.4% to 2.98 million visitors.

During 2024, the total number of tourist arrivals in the country soared by another 19.5% to reach a new record-high of 3.56 million visitors. It is now more than 29% higher than the pre-pandemic peak of 2.75 million tourists seen in 2019.

Then in the first nine months of 2025, tourist arrivals in Malta totalled approximately 3.08 million visitors, up by 11.7% from the same period last year.

By nationality:

• United Kingdom: tourist arrivals from the United Kingdom were up strongly by 19.4% y-o-y to 639,200 visitors in the first nine months of 2025.
• Italy: Malta welcomed around 471,800 Italian tourists in the first nine months of 2025, down by 7% as compared to a year ago.
• France: There were a total of 234,500 French tourists recorded in Malta in Jan-Sep 2025, down by 4.5% from a year earlier.
• Germany: There were about 193,200 German tourists in the country in Jan-Sep 2025, up by a modest 3.9% from a year earlier.
• Other Euro area: Malta welcomed approximately 620,200 tourists from other Euro area member countries in the first nine months of 2025, up by 14.1% from the same period last year.
• Non-EU countries: A total of 1,046,800 tourists from non-EU countries visited Malta in the first nine months of 2025, up strongly by 17.9% from a year earlier.

Britons accounted for 20.8% of total tourist arrivals in Malta in the first nine months of 2025, followed by Italians (15.3%), French (7.6%), and Germans (6.3%). Non-EU citizens represented about 34% of total arrivals over the same period.

Vacancy rate remains high

Paradoxically, over the past decade, Malta's residential vacancy rate has remained high, despite continuously rising house prices. The vacancy rate now stands at 18% of total dwelling stock - one of the highest in the European Union. Many say this is due to Malta's rent control system. To protect tenants, private rental market rents are frozen, and landlords are prohibited from evicting tenants unless a suitable alternative accommodation is offered. To increase the rent, the landlord needs the approval of the Rent Regulation Board, which is hardly ever granted.

To address the issue, the Rent Reform Law came into force on January 1, 2010. The new law established an annual minimum rent and was intended to gradually stop the inheritance of rented properties so that they revert to their owners.

Moreover, to address another source of vacant properties, the government recently reduced from 10 years to 3 years the period after which an inherited property in dispute can be sold, provided that most (but not all) heirs agree on the sale price.

To further encourage the use of vacant properties, the government reduced the stamp duty on transfers of properties within an urban conservation area from 5% to 2.5% in 2016. Also, transfers of restored properties within an urban conservation area will now have a lower final withholding tax, reduced from 8% to 5%. In 2017, the government also lowered the stamp duty on properties acquired in Gozo from 5% to 2%.

Yet according to others, vacant properties don't pose a serious problem. This is the view of Malta Developers' Association president Sandro Chetcuti. "Just drop this about vacant properties," said Chetcuti. "There is no problem with this. There are around 55,000 properties and more than half of these are second homes or summer residences, while half of the remainder are either dilapidated or being fought over by heirs. The rest are on the market, but they are simply overpriced and cannot sell."

In 2018, the Housing Authority introduced the Skeme Nikru Biex Nassistu program, encouraging private owners of one, two, or three-bedroom properties at least 30 years old that have been vacant for a year or more to enter into a lease agreement with the Authority for ten years.

The vacant property owner will receive a maximum grant of €25,000 to refurbish the property. The Housing Authority will then rent the property from the owner in a fully finished state, with the rental based on a set of criteria. During the 10-year period, the owner will receive constant rental payments, with a 2% increase annually. Moreover, the owner is exempt from paying tax on the dwelling rented.

Mortgage Market:

Mortgage interest rates remain low

Mortgage interest rates in Malta remain low, as the ECB cut its key rates in recent months amidst easing inflationary pressures. In October 2025, the average interest rate on new housing loans was 1.99%, still up from 1.81% in the previous year but slightly down from 2.02% two years ago, according to the European Central Bank (ECB).

Malta's mortgage loan interest rates:

Note: Annualised agreed rate (AAR) / Narrowly defined effective rate (NDER)
Data Source: ECB.

By initial rate fixation (IRF):

• Floating rate and IRF of up to 1 year: 2.69% in October 2025, slightly higher than the 2.52% in the same period last year and 2.57% two years earlier.
• IRF of over 1 and up to 5 years: 1.74%, up from 1.39% in October 2024 and 1.6% in October 2023.

For outstanding housing loans, the average interest rate stood at 2.49% in October 2025, slightly down from 2.59% in the same period last year and 2.68% two years ago.

By maturity:

• Up to 1 year: 1.62% in October 2025, sharply down from 2.94% in October 2024 and 3.7% in October 2023.
• Over 1 and up to 5 years: 4.8%, slightly down from 4.74% in the previous year and also lower than the 3.94% recorded two years earlier.
• Over 5 years: 2.49% in October 2025, slightly down from 2.58% in the same period last year and 2.68% two years ago.

Housing loan interest rates in Malta have followed the ECB repo rate movements in the past. Housing loan rates fell sharply from late 2008, following ECB rate cuts. When the ECB cut its base rate to 0% in March 2016, where it remained until the first half of 2022, housing loan rates in Malta also stabilized at around 3%.

However, despite the successive rate hikes implemented by the ECB in the second half of 2022 to 2023 to rein in soaring inflation in the region, interest rates on housing loans in Malta have surprisingly remained more or less steady during the period. Even when the ECB implemented a monetary policy shift in recent months, cutting the ECB repo rate eight times from June 2024 to June 2025, mortgage interest rates in Malta hardly moved, except for the short-term loans.

The ECB key interest rates have been unchanged since.

The mortgage market continues to grow

New mortgage transactions in Malta continue to increase, thanks to relatively low interest rates. In Q2 2025, the total number of new mortgage contracts rose by 3.1% to 1,315 as compared to a year earlier. This figure is far above the average quarterly transactions of 987 recorded since 2016.

"In the second quarter of 2025, the number of new mortgage contracts stood at 1,315. When compared with the second quarter of 2024, they rose by 3.1%. In absolute terms, the increases were observed mainly for maisonettes, terraced houses and apartments & penthouses, which were counteracted by lower mortgages for other types of houses, including townhouses and houses of character, captured in the 'Other' category," said the Central Bank of Malta.

"The total number of mortgage contracts in the second quarter of 2025 stood below the recent peak of 1,511 transactions recorded in the last quarter of 2019, but above the average of 987 transactions per quarter recorded since 2016," added the central bank.

Housing loans grew by an average of 8.1% annually from 2010 to 2020, a slowdown from the annual average growth of almost 13% in 2006-2009. Housing loan growth continued in recent years, registering a nearly 11% increase in 2021, 10.4% in 2022, 7.9% in 2023, and 9.3% in 2024.

In October 2025, total housing loans outstanding in Malta rose further by 9% y-o-y to €9.07 billion (US$10.64 billion).

Accordingly, major domestic banks extended more than 90% of the credit to households and individuals, including mortgage loans.

The median loan-to-value ratio stood at 79.5% last year, up from 76.5% in the preceding year but still slightly down from 80% two years prior, according to the Hypostat 2025 report released by the European Mortgage Federation.

The core domestic banks extended well over 90% of the credit to households and individuals (which includes mortgage loans).

Malta's mortgage market is dominated by two major banks - Bank of Valletta plc and HSBC Bank Malta plc.

"Mortgage loans are mainly provided by the core domestic banks, predominantly Bank of Valletta plc and HSBC Bank Malta plc, which account for around 66% of the domestic retail market (as a percentage of total deposits held by the core domestic banks). These latter banks rely mainly on resident deposits for funding, which increased to almost EUR 29.5 billion," said the 2025 Hypostat report.

The size of Malta's mortgage market has stabilized to about 36% to 40% of GDP from 2009 to 2024, thanks to low and stable interest rates.

Accordingly, property investment in the country has become increasingly attractive in recent years due to several factors, including rising disposable income, the influx of foreign workers that boosted property demand, and the growth of tourism, which generated strong demand for private accommodations.

Socio-Economic Context:

Malta's robust economic growth, strong labor market

Malta's economy has been growing robustly in the past several years, as economic activity returns to pre-pandemic levels. The country registered real GDP growth rates of 13.3% in 2021, 4.3% in 2022, 6.8% in 2023, and 5.9% in 2024, fully offsetting the 3.4% contraction seen in 2020. The robust growth was driven by a rebound in domestic demand and export of services, benefiting from the recovery in tourism.

Before the pandemic, the economy had been growing strongly, with an annual average growth of 6.2% from 2012 to 2019, based on IMF figures.

"Malta has experienced remarkable growth over the past decade, primarily driven by export-oriented service industries, such as tourism and online gaming," said the International Monetary Fund (IMF). "Although growth is expected to moderate, it will remain among Europe's highest in the near term, along with tight labor markets."

In the third quarter of 2025, the country registered an annual growth rate of 3% as compared to a year earlier, following year-on-year expansions of 2.8% in Q2 and 3.6% in Q1, buoyed by strong household consumption and external trade, according to the NSO. Over the same period:

• Household consumption increased by 3.2% y-o-y in Q3 2025, following a 3.1% growth in the previous quarter.
• Fixed capital formation fell by 1.4% y-o-y in Q3 2025, in contrast to an increase of 1.5% in the preceding quarter.
• Government spending slowed sharply, increasing by a meager 0.8% y-o-y in Q3 2025, compared to an 8% growth in Q2 2025.
• In terms of net trade, exports increased by 3.9% y-o-y in Q3 2025 while imports grew more slowly by 3.1%.

With this, the Maltese economy is expected to remain fundamentally healthy in the medium term. The European Commission expects Malta to post an economic growth of 4% this year, 3.8% next year, and 3.5% in 2027. The IMF, on the other hand, released an economic growth forecast for the country of an annual average of 3.9% this year and in 2026.

"Real GDP is projected to grow by 4.0% in 2025, driven mainly by robust private and public consumption, investment, and supported by growth in tourism, gaming and financial and professional services," said the European Commission. "Real GDP growth is forecast to remain robust, though slowing, at 3.8% in 2026 and 3.5% in 2027, reflecting capacity constraints and higher prices in the tourism sector along with labour shortages."

The Central Bank of Malta's latest growth projections are not significantly different, expecting the domestic economy to grow by 3.9% this year, 3.5% next year, and 3.3% in 2027.

The government's public finances continue to improve. The budget deficit is expected to fall to about 3.4% of GDP this year and further to 3% of GDP in 2026, from 3.7% in 2024, 4.4% in 2023, 5.3% in 2022, 7% in 2021, and 8.7% in 2020, according to central bank projections. Despite this, Malta's general government debt is still projected to grow slightly to 48.3% of GDP this year and to 48.7% in 2026, from 47.4% of GDP last year.

Inflation remains manageable. In October 2025, nationwide inflation, measured by the harmonized index of consumer prices (HICP), stood at 2.5%, slightly up from 2.4% both in the previous month and in the same period last year, according to the NSO.

Inflation averaged 2.9% in 2008-12 and 1.1% in 2013-21, before surging to 6.1% in 2022. It remained elevated at 5.6% in 2023 before easing to 2.4% last year.

The labor market remains fundamentally strong. Unemployment declined to 2.7% in Q3 2025, from 2.9% in the previous quarter and 3.2% a year earlier, according to the Central Bank of Malta.

The total number of unemployed individuals decreased by 1,005, bringing the total down to 9,434 in Q3 2025, while inactive persons declined by 2,352 to 158,304 over the same period.

The country's unemployment rate is expected to fall slightly to an average of 2.8% this year and to 2.7% in 2026, from 3.1% last year and 3.5% in 2023.

"The labour market remains strong, and demand for labour is envisaged to stay high. However, the increase in employment is expected to moderate over the projection horizon, driven by the projected easing in economic growth and an assumed recovery in productivity," said the central bank.

"The unemployment rate is forecast to edge down to 2.8% in 2025 and 2.7% in the following two years. The labour market is envisaged to remain tight, as the NAIRU is projected at around 3.2%, so that the unemployment gap is forecast to be slightly negative in the outer years of the forecast horizon," added the central bank.

Sources:

• Real Economy Indicators (Central Bank of Malta): https://www.centralbankmalta.org/
• Residential Property Transactions: November 2025 (National Statistics Office): https://nso.gov.mt/
• Residential Building Permits: Q3/2025 (National Statistics Office): https://nso.gov.mt/
• Everything You Need to Know About the New Maltese Exceptional Investor Naturalization (MEIN) Regulations (IMI Daily): https://www.imidaily.com/
• Malta Citizenship by Investment Ending (Global Citizen Solutions): https://www.globalcitizensolutions.com/
• More than 70,000 active rental contracts with the Housing Authority in the first half of 2025 (Business Now): https://businessnow.mt/
• The Private Rental Market in Malta (Housing Authority): https://housingauthority.gov.mt/
• Quarterly Review 2025 Vol. 58 No. 4 (Central Bank of Malta): https://www.centralbankmalta.org/
• Quarterly Review 2024 Vol. 57 No. 3 (Central Bank of Malta): https://www.centralbankmalta.org/
• European Union Home Ownership Rate (Trading Economics): https://tradingeconomics.com/
• Key ECB interest rates (European Central Bank): https://www.ecb.europa.eu/
• Hypostat 2025: A Review of Europe's Mortgage and Housing Markets (European Mortgage Federation): https://hypo.org/
• Stamp duty measures announced in the Budget Speech for 2017 (ACT): https://www.act.com.mt/
• 'No problem' with vacant properties, says developers' rep (Times of Malta): https://timesofmalta.com/
• Skema Nikru Biex Nassistu (Housing Authority): https://housingauthority.gov.mt/
• Nikru biex Nassistu (Housing Authority): https://housingauthority.gov.mt/
• Economic forecast for Malta (European Commission): https://economy-finance.ec.europa.eu/
• Malta (International Monetary Fund): https://www.imf.org/
• Outlook for the Maltese Economy 2025:3 (Central Bank of Malta): https://www.centralbankmalta.org/
• IMF Executive Board Concludes 2024 Article IV Consultation with Malta (International Monetary Fund): https://www.imf.org/
• Malta: Staff Concluding Statement of the 2025 Article IV Consultation Mission (International Monetary Fund): https://www.imf.org/
• Malta's Q3 2025 GDP Grows 3% (Trading Economics): https://tradingeconomics.com/
• Malta GDP Annual Growth Rate (Trading Economics): https://tradingeconomics.com/
• Harmonised Index of Consumer Prices (HICP): October 2025 (National Statistics Office): https://nso.gov.mt/
• Labour Force Survey: Q3/2025 (National Statistics Office): https://nso.gov.mt/