09 July 2003

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Toon this week: Snug within his bubble

The sustainability of property prices

Property and their prices seem to be all the talk and if something is moving on these islands, besides by reason of earth tremor, it is property.
Months prior to the EU referendum and elections speculation was rife on whether foreigners would settle in Malta following EU accession, and push property prices up. The talk seems to have done the trick and prices duly skyrocketed. Since the elections little has changed in this quarter and prices continue to reach for the heavens.
A comparison of property adverts a year ago compared with similar properties now will show that the Monopoly board has been updated into a new century.
The estate agents are ecstatic and going for the jugular. All sorts of new schemes are being created to assist people to sell their old, and buy new properties. Some agencies are even resorting to phoning everyone they know and encouraging them to put their homes on the market with the lure of infinitely higher returns.
The Tigne development showed we did not have to wait for the foreigners really and 80 percent of the apartments on offer were snapped up by Maltese buyers.
While the market seems bullish now not all the signs are good. It is true that property speculation gives a much more uncomplicated and quicker return than starting up one’s own business, and it is also true that property prices have never gone down on these dry isles.
However, if the property market does not follow the economic laws of supply and demand, there is nothing to say it will not follow the scientific law of what goes up must come down.
Maltese properties are considerably higher priced than similar sized ones in other Mediterranean resorts including parts of Spain, Cyprus, Portugal, Greece and Italy. Much of the property on sale in these countries enjoy more wonderful environments than what is on offer here.
Malta is out-pricing itself and the long expected foreigner induced property boom may well never materialise. People that have bought properties for speculative, rather than for domicile, reasons should be weary. Several notaries are seeing a picture that is far from rosy for the property market, and their advice should not be taken lightly.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Business Times, Newsworks Ltd, 2 Cali House, Vjal ir-Rihan, San Gwann SGN 02, Malta
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