An overview of the Maltese property market

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In recent years, Malta has become a popular place for buying property. However, with the economic growth of the property market come a series of challenges and difficulties potential buyers must consider. Whether buyers are considering living in Malta, operating a business or simply purchasing to rent out, understanding what has made this market grow, and the challenges, is essential to success.

Factors driving the Malta housing market

There are many reasons for the property market in Malta being so lucrative. Current performance shows that there has been a massive increase in growth since 2023, though the market does have fluctuations similar to other countries. This rise is primarily due to an increase in demand for townhouses and apartments, both for self-ownership and onward rentals. Not all areas of the island are hit in such a manner though. Primarily, rising prices are located in Sliema, Valletta and St Julian’s. The number of property transactions has also increased by 3.5% in the same time period, indicating strong demand. But what actually drives the market?

Considering the drivers

With many Malta houses for sale, understanding the drivers is key before an investment:

● Foreign investments: a large portion of property purchases in recent years are by foreign businesses or expats. This is because Malta has a favourable citizenship agreement for investors. And, there are great tax treaties and exemptions in place for specific countries and businesses. This has caused an increasing number of businesses to relocate to Malta and operate their businesses here.
● Economic growth: Malta has had excellent economic growth in the past decade. With an increase in GDP of 5.4% since 2023, there is a steady climb. Part of this is to do with the foreign investments. And also the rise in specific sectors such as iGaming, finance and tourism. With an increase in these sectors comes more disposable income allowing locals to make more property purchases.
● Rental properties: as mentioned, tourists are flocking to Malta for many reasons, some of which include the great climate, food and local culture. This has made it a desirable place for property owners to purchase homes and rent them out for both short and long term periods. Such a move is a great way to invest, as it’s unlikely tourists will stop coming to Malta any time soon.
● Supply and demand: as with other areas, part of what has driven Malta’s property market upward is the supply and demand. There is limited land available on Malta as well as strict planning regulations. This means that there are not unlimited new properties available. With increased demand, so the price rises.
● Location: finally, not all locations are equal. Some areas such as coastal or the bigger towns are incredibly popular. Subsequently, prices here rise even more steeply, even for smaller properties.

Challenges in the housing market

There are of course, potential issues that may arise in this housing market. For instance, with rapid price increase comes the lack of affordability. While international investors may be on a better footing here, locals and current residents are not. But, relying on foreign investment is also an issue. Should there be a change in economic conditions or the attractiveness of Malta wane, then the country could be in trouble, with sharp declines in property value possible.

Additionally, there are increasing environmental concerns. With properties getting renovated and development, there is a chance that both coastal and green areas within Malta will be negatively impacted. With such an impact, this could affect property prices too. And, let’s not forget the over-saturation of the market. While an Airbnb might be a good thing to invest in at the outset, standing out is increasingly key to success. This means that careful consideration needs to go into the interior design and modern amenities provided in such a property.

Considering where exactly to purchase can also be difficult. Each locality has something different going for it. Families looking for holiday rentals will head to places like Mosta, Lija or Zurrieq. While families looking to move and put down roots aim for Naxxar and Attard. Businesses and young professionals aim for more bustling locations such as St Julian’s or Sliema. While the affordable centre of Malta — Msida, and Swatar, are good for those just getting started.

Whatever the investment though, care must always be taken to abide by Malta’s regulations.

 

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