Property recovers to pre-crisis highs
Prices up 4.7% in 2016
However, the CBM said there was no cause for alarm about affordability
as the ratio between the median house price and households’ income remained significantly low when compared to the boom period of 2005/2006.
The bank said there were two reasons for this: the fact that incomes were rising, and the fact that pressure driving up prices was mostly generated by foreigners seeking jobs in Malta.
The CBM noted that in response to the higher demand, supply was also expected to increase in the near term, as the number of permits issued by the Planning Authority almost doubled in 2016 – although not to the pre-crisis peak.
Meanwhile, the bank repeated its Real Estate Market Survey among real estate agents, a larger share of whom expressed their view that residential properties were overpriced in 2016. In spite of this, the number of sales of existing and new residential properties continued to rise.
Sales of commercial properties – especially office space – also grew, but in this sector, while the large majority of respondents perceived commercial real estate property to be correctly-priced, more and more expressed the view that such properties were over-priced in the second half of the year.
Noted: The chart shows real house prices, where the nominal prices are adjusted for inflation.