Pandemic compounds ongoing decline in property prices, report shows

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The Covid-19 pandemic brought about a downward trend in property prices in the wake of a year which had largely brought rapid price increases to a halt, a new study has shown.

A report compiled by Djar and EY Malta show that 69% of advertised properties were advertised at a lower value in the first quarter of 2020 – when the pandemic hit – when compared with the last quarter of 2019, a jump from 35.5% in 2017-2018 and 38.5% in 2018-2019.

But as Djar CTO Keith Galdies explained, “this downward shift started in the last quarter of 2019 – due to changing demands, an increase in supply, and prolonged political uncertainty that dented Malta’s reputation with foreign investors.”

This has only been compounded further by the arrival of the pandemic, which impacted the real estate sector in various ways. These effects include the postponement or delay of property purchases, a slowdown in construction activity,

Gozo bucks the trend

The study shows that advertised prices fell by an average of 0.16% during the first three months of 2020, but while prices fell in all statistical regions on Malta, Gozo remained an exception to the rule. Property prices in the island actually registered a modest increase of 0.17% during the same period.

Broken down by localities, the largest price decreases in the first three months of 2020  were recorded in Madliena (-1.05%), Senglea (-1.03%) and Valletta (-0.76%). Only a handful of localities in the island of Malta registered a price increase, and a very modest one at that: the highest price increase, recorded in Għargħur, was just 0.08%.

These decreases follow a relative downward trend during 2019, though price increases had still been recorded in many localities then. The greatest fall in prices had been recorded in Madliena (-3.37%), Lija (-2.17%) and Valletta (-1.9%), while the highest increases were reported in Burmarrad (1.66), Gozo (1.24%) and Gudja (1.09%).

Though a report for the second quarter of 2020 is still a work in progress, the data available to Djar suggests that this downward trend has only continued.

“A sample of the properties which changed price between Q1 and Q2 is showing that 61 per cent dropped their asking price, clearly showing vendors’ appetite to secure a quicker sale,” Galdies maintained.

The trend does, in part, appear to be compounded by bloated asking prices in recent years. Such prices have led to properties taking longer to sell, with housing on average spending as much as 370 days – just over the year – listed on the market before being sold.

Average prices range from €1,475-€3,186 per sqm

One reason prices for Gozitan homes may still be increasing is that they remain the cheapest on the market. On average, an apartment in Gozo is advertised at a price that translates to €1,475 per square metre, while the average rate for Gozitan houses is €1,906/sqm.

Though as one may expect, houses are more expensive than apartments in every part of Malta, the discrepancy is minimal in the region where prices are highest: the Northern Harbour region. While the average house in the region may cost €3,186/sqm, the average apartment is only slightly cheaper, at €3,006/sqm.

On the island of Malta, the cheapest region is the South Eastern Region, though prices remain considerably higher than in Gozo, with apartments averaging €1,909/sqm and houses averaging €2,592/sqm.

Prices in the other three regions are roughly equivalent. Among the three, the Western Region records the highest price for houses (€3,029/sqm) but the lowest price for apartments (€2,157/sqm). The average price of apartments stood at €2,313/sqm for the Northern Region and €2,271 for the Southern Harbour Region, while the average price of houses stood at €2,890/sqm and €2,829 respectively.