The price of property experienced an accelerated growth in 2004, the year Malta officially became a European Union member state and the top-most VAT rate increased to 18 per cent an analysis of statistics published by the National Statistics Office reveals.
The recently published Property Price Index by the NSO, which uses prices of three property types - apartments, maisonettes and terraced houses – shows that the index of apartments has now reached around 140.
The prices for this category had started to increase in 2004 when top quality apartments at MIDI complex were available for sale.
A higher increase in a category index was that experienced for maisonettes, which has now reached 179. This is the house type that is very popular for first time property buyers. Again the index started to experience an accelerated growth in 2004 confirming that land comes at a premium price.
However, the highest index increase experienced was for terraced houses, which now stands at nearly 191.
Anyone who invested in a terrace house at the end of 2001 and sold off in March this year, almost got double the price what it cost him on purchase.
In compiling these indices, the NSO did not distinguish between new and old houses and in every case took the median price.
A price of a property is dependent on its location, type, state of maintenance, finish, sizes of rooms and amenities. However, one must add another factor, the availability of finance. Commercial banks regularly come up with innovative schemes to lure buyers to buy out their dream home. However, there is another category of buyers, who use bank loans for speculative reasons given the rate of inflation registered by the all property index.
It still has to be seen whether the land in the recently announced development zones, once built up, would serve to adjust the property index and correct the inflationary aspect experienced in property prices.
The index covering all property experienced an inflationary impact of 169.01 as at March this year, or 16 per cent.
The NSO statistics take December 2001 as the base year figure.