Residential property prices drop in the fourth quarter1 Advertised property prices fell on an annual basis by 2.0% in the fourth quarter of 2010, mostly on account of declining apartment prices.
The decrease followed three quarters of persistent growth, so that for 2010 as a whole, the Bank’s index increased at an average rate of 1.1%, following a drop of 5.0% in 2009 .
Although the decline was spread across most housing categories, the most significant drop in prices during the quarter was for apartments and, to a lesser extent, for terraced houses and properties in the “other” category.
Prices of apartments, which make up almost three-fifths of advertised properties, experienced a decline of 0.8%. This drop contributed around 1.1 percentage points to the overall decrease during the quarter. Over the year as a whole, apartment prices were 2.6% higher than in 2009.
During the fourth quarter, asking prices for terraced houses declined by 7.7%, contributing a negative half a percentage point to the overall change in the property
price index. Prices in the “other” category, which consists of townhouses, houses of character and villas, fell by 13.0% largely as a result of a reduction in asking prices for villas. Consequently, the category contributed 0.8 points to the total drop. In contrast, prices of maisonettes gained 0.4%, softening the drop in overall property price inflation
by 0.4 percentage points.
A measure of activity in the housing market is provided by the number of advertised properties captured in the Bank’s survey. This contracted by 12.4% on a year earlier in the December quarter, compared with a 1.0% decline in the September quarter.
For the year as a whole, the number of advertised properties declined by 5.9%. Moreover, the number of building permits issued by the Malta Environment and Planning Authority (MEPA) decreased by 22.4% year-on-year in the December quarter, following an increase of 4.3% in the previous quarter. This was mostly due to a lower number of permits issued for apartments (which make up over four-fifths of the total issued) and maisonettes, both of which fell by around a quarter. In 2010, the number of issued permits was 16.1% smaller than in 2009.