Issue link: https://maltatoday.uberflip.com/i/1385129
5 20 JUNE 2021 T he onset of the COVID-19 pandemic in early 2020 brought many sectors to a standstill as measures introduced to mitigate the spread of the vi- rus severely limited consumers' spending power and options. e construction industry was one of the sectors least affect- ed by mitigating measures. And once some restrictions were lifted, the real estate business exploded, resulting in record numbers of promises of sale and contracts be- ing recorded. An update of the Construction Industry and Property Market Re- port carried out by KPMG found that the construction industry is still one of the main drivers of the Maltese economy with core construction activities contribut- ing €694.12 million in gross value added. When considering the direct and indirect impact, the Construction and Real Estate sectors contribute around 13.5% of Malta's GVA and from 2016 to 2017, direct, indirect and induced output grew by 8.9% to €2.56 billion. Full-time employment in the sector also grew by 8.9% to 37,428. A survey carried out in January this year showed that, despite the current economic stress, a signifi- cant 58% of the respondents were entertaining plans to purchase property and another 16% were on the lookout to rent property. 26% of the respondents who opt- ed to take the survey stated that they had no planned real-estate transactions. Renting a property Geographically, St Paul's Bay is the most sought-after area with respect to the rental of property in Malta, closely followed by oth- er localities on the island, name- ly Hamrun, Sliema, Mosta and Qormi. is ties in with recently observed trends in population growth, whereby St Paul's Bay has emerged as Malta's most popu- lous locality. Looking to buy e majority of prospective property buyers, at 58%, state that they intend entering a real estate transaction alone. e survey also provides insight into the inten- tions of prospective new home- owners. 33% of purchase deci- sions are prompted by first-time property buyers who are moving out of their parental home, while a further 20% are seeking a new property to upgrade on their ex- isting residence. A further 23% of the population intend to acquire a property for investment pur- poses. Out of the total barometer pop- ulation, 80% are looking to buy property in Malta, whilst 10% are on the lookout for property on both islands and 10% wish to buy property exclusively in Gozo. e survey also provides in- sights into the ranges of property prices that prospective purchas- ers are considering with 80% of respondents looking at proper- ties at a value of €300k or less. Arguably, this pricing point could lead to certain pressures within the property market in view of the apparent consistent upward trend observed on pub- licly available real estate price indices. While 43% of respondents are seeking apartments or penthous- es, 25% are on the lookout for mai- sonettes and 11% intend to buy a house of character. Research sug- gests that the most popular lo- cations in Malta for prospective buyers are Mosta and Birkirkara, closely followed by Lija, Attard, Balzan and Sliema. Meanwhile, in Gozo, Gharb and Ghajnsielem are the most sought-after desti- nations for property acquisitions. Property Price Index During the first quarter of 2020, the Property Price Index (PPI) stood at 125.14, a rise of 5.6 per cent when compared to the corresponding quarter of 2019. Figures indicate that the main driver of the increase was the Maisonettes price index, al- though the apartments price in- dex also went up. e PPI is compiled by the Na- tional Statistics Office on the ba- sis of the median price for each dwelling type. e PPI aggre- gates the indices of apartments, maisonettes and terraced hous- es. e weights used to compile the index are based on the val- ue of transactions for the three property types. No distinction is made between new and old dwellings. Over 1,000 transac- tions are considered every quar- ter. While price indices are indica- tive of price trends in the mar- kets for the reference proper- ties and the property market in general, they are limited by the heterogeneity of the property market. It is widely recognised that the price of a property is dependent on its location, type, state of maintenance and finish, age, tenure, the number of bed- rooms and bathrooms, size, and the availability of other ameni- ties like yards and gardens. Terraced houses are reflected in the PPI. However, such price indices are not published due to the low count of transactions recorded every quarter. An addi- tional indicator being compiled is an Aggregate Index based on apartments and maisonettes. 43.00% 25.00% 21.00% 11.00% Apartments / Penthouses Maisonettes Villas / Bungalows / Others House of Character Property types most in demand €100k - €150k €151k - €170k €171k - €200k €151k - €170k €201k - €250k €251k - €300k €301k - €350k €351k - €400k €401k - €500k €501k - €750k €751k - €1m Over €1m 21% 16% 15% 16% 13% 4.2% 8% 4% 5% 1% 1% 0% Most buyers looking for property valued at €100,000 - €150,000 COVID-19 and the property market