Press Room
www.maltatoday.com.mt/2008/04/06/n10.html
Electoral ‘freeze’ for property market
Malta’s foremost property agents say the euro changeover and the electoral campaign generated a slowdown in the property market, but the president of the estate agents’ federation says talk of a slowdown is ‘irresponsible’. CHARLOT ZAHRA reports
The property market has experienced a slowdown in the first two months of the year, sending alarm bells across the business community, MaltaToday can confirm.
Estate agents who spoke to this newspaper said the slowdown was mainly attributable to the electoral campaign, which was in earnest during the first two months of the year, culminating in the March 8 general election, as well as the introduction of the euro on January 1.
However, they said the pre-electoral freeze was defrosting and the property market was gradually returning to normal again. Asked about the slowdown, Douglas Salt of Frank Salt Real Estate said: “There was a slowdown in the residential property market in the last two weeks of the electoral campaign, but the market has now caught up again”.
He said the commercial property market was not affected by this temporary slowdown. “In addition, the letting market did not suffer from a slow-down either,” Salt said.
According to Salt, the rate at which the price of property rose has now stabilised at around 5% a year after reaching a peak of 15% a few months ago. “This is a natural correction of the market after sustaining a rally for so long,” Salt told MaltaToday.
Asked whether there was a glut in the property market as a result of the new properties that flooded the market recently, Salt said this was not the case.
“There are around 8,000 foreign work permit holders, mostly working in the e-gaming sector, who need to find accommodation. These people would usually choose to rent rather than buy property first. “Moreover, there was demand for the new ‘lifestyle projects’ such as Pender Gardens or Metropolis, with people selling their villas and moving into these new upmarket residence,” Salt told MaltaToday.
Alan Camilleri, CEO of Dhalia Group, said the first quarter of 2008 was characterised by both the euro changeover and the electoral campaign. 37“It’s not surprising that business sentiment slowed down during this period, and it is a natural reaction to uncertainty. Now that the water is under the bridge, the market is once again gathering momentum at a rapid pace.” Camilleri said the latest Central Bank Quarterly report provided the answer as to whether there is a slowdown in certain sectors. “According to the Central Bank, data for the last quarter of 2007 indicate that advertised residential property prices were almost unchanged on a year earlier. “Upmarket properties keep appreciating at a much higher level than shell-form maisonettes for example. This is where developers, planners, real estate agents and other stakeholders, including government, need to work together to ensure that there is an adequate supply mix which matches the demands, which demands change according to the emerging economic and social realties,” Camilleri said. He said its contribution to the country’s nominal GDP had largely remained the same over the past two years. “Although there is an absence of consolidated statistics on property sales, the quick uptake of large scale property developments shows that the market is still vibrant and healthy.” He also said Dahlia’s ‘discount’ sale advertised in this week’s papers was a one-off scheme intended to help first-time buyers: “We are not offering the properties at a discounted rate, but we have tied in together as well a discounted 5% interest rate on home loans from BOV, as well as discounts on furniture and appliances from Fino and Forestals.”
On his part, Trafford Busuttil, President of the Federation of Estate Agents (FEA), which represents 38 estate agents in Malta and Gozo, confirmed the property slump. “In my opinion the market is going through something very natural in the circumstances. One has to consider that the island has just changed over to the euro and just a few weeks ago we had a general election. Things are returning to normal and the market is picking up again.” Busuttil was however wary of using the term “slowdown” when asked by MaltaToday to confirm the slump.
“In my opinion, this is not a slowdown but a temporary lull we always experience during and slightly after election time. At this moment in time it is extremely premature and irresponsible to talk of a slowdown, and in my opinion we are misinterpreting a marketing campaign presented by one of the leading players in the market as the start of a slow down in the market,” he said, with obvious reference to Dhalia’s property sale. “The company that presented this package is following a marketing strategy to boost it revenue. I must stress this is not the situation all our other members are experiencing. I can safely state that market value properties sell in record time, and it is here that we have to educate the home owners, in that they have to have professionals value their property and not just place a price tag of what in their opinion it would fetch on the market.
“The local property market is still very active and if the past is a reflection of the future then we are looking at a very exciting future,” Busuttil said.
He also disagreed there is actually a property glut on the market. “If one had to analyse the 2005 Census, in relation to property, the number of vacant property is much lower than stated. The reasons being that many of the so-called ‘vacant properties’ are either holiday homes or properties that are being rented out to local and overseas nationals. “To give you an idea, there are 8,000 work permits issued to foreign nationals, which by natural deduction rent property on the island. For instance in Ghasri, Gozo, the Census states that there are 200 vacant dwellings, when we all know the size of this village, with a total population of 418 people. Therefore it is safe to state that the so called ‘vacant properties’ are not vacant at all but owned by Maltese and foreigners as holiday homes.
“Looking at the census closely one can find this trend in all the traditional rental ‘hotspots’, Busuttil told MaltaToday. “Apart from the above one must also take into consideration the large number of properties that are in dispute.”