Apartment Price Index up by 4.5% whereas Maisonettes Price Index Remains Unchanged.
A report from the National Statistics Office issued yesterday announced that the PPI (Property Price Index) increased by 2.8% whereas the PVI (Property Volume Index) increased by 11.9%.
The data utilised for this report was based on Apartments, Maisonettes and Terraced Houses only. The Maltese property market records on average between 875 and 1050 transaction per month however for the sake of this exercise 1000 transactions per quarter are considered. One thousand transactions is a representative sample of the property market.
The properties included are indicative of developments located inland, construction prices and the property market in general. It is also important to note that the difference between the PPI and the PVI is that the PPI refers to prices whereas PPV refers to volume of transactions. The price index was based on the Laspeyres Index Formula, named after the Economist Etienne Laspeyres, a standard method for National statistics offices across the Globe. This report is compiled by the NSO on a quarterly basis.
The report issued confirms RE/MAX Malta’s forecasts and statistics in that prices are increasing whilst the volume of transactions have increased generously over the last quarter continuing with the on-going trend of later 2014.
According to the CEO of RE/MAX Malta, Mr. Kevin Buttigieg, the positive results have been attributable to the regained confidence from the local commercial banks, the fact that developers are meeting their deadlines and that the one time subsidy for first time buyers has been a main contributing factor that has encouraged further sales from Millenials at the lower price brackets, effecting areas such as St. Paul’s Bay and Marsascala considerably.
The increase in transactions in the Sliema & St. Julian’s is neither a surprise, with the surge in investors that are buying property for the sole use of achieving rental income. The reduction of tax on rental income to 15%, introduced at the beginning of this year, has provided added encouragement for individuals to invest in a second property.
Moreover we have also seen an increase in foreign investment that has been prompted from the advantageous residence schemes and the IIP introduced over the last two years, which obligates an applicant to rent or purchase a property in Malta or Gozo as part of the qualifying criteria.
These investors predominantly purchase upmarket property, more specifically in the Special Designated areas at prices starting from € 420, 000. A minority percentage has chosen to purchase at the limited thresholds and throughout Malta and Gozo.
In general, these results are a sign of a healthy real estate market in which we envision will continue its growth over the next quarter and beyond. RE/MAX have heavily invested in market research to understand how they may improve their service and also understand the market more clearly. The company are pleased to see this report and urges the NSO to continue developing this report and their investment in market research for the real estate market in Malta.
Kevin Buttigieg, who is also the Vice President of the Federation of Estate Agents, concluded by saying “It is great to see the NSO delivering market research to the public eye. The real estate market is a pillar of the economy and we look forward to working with the competent authorities in the future”.