Issue link: https://maltatoday.uberflip.com/i/1386209
6 NEWS maltatoday | WEDNESDAY • 23 JUNE 2021 Study finds increased convergence between Gozo and Malta property prices NICOLE MEILAK THE Gozo property market has been reporting persistent price growth across the island, indi- cating continued price conver- gence and increasing homoge- neity between Malta and Gozo. A property market report conducted by Djar and EY looks at the latest web-based listing for residential and com- mercial property markets for the first quarter of 2021. According to the report, most residential property listings have maintained their ask- ing prices, leading to minimal changes in the recorded avaer- age price. However, average quar- ter-on-quarter price changes range between -1.6% to +2% across localities, with half of all localities registering an overall average listing price increase. The largest share of asking price reductions were recorded for the Northern Harbour and Northern regions, while persis- tent price growth has been seen in the Gozo property market. In terms of year-on-year av- erage value changes, terraced houses and houses of character have experienced the largest number of price reductions, possibly due to having been im- pacted harder by the pandemic given their upscale nature. From a regional perspective, downward average price trends were mostly concentrated in the Northern Harbour region, the report said. The report also takes a look at asking prices vis-à-vis average deed values as recorded by NSO data. While the overall average asking price within the Djar da- tabase stands at €400,000, the average deed value on contract- ed prices is at €200,000. "Notwithstanding differences in the nature and components of asking and contractual price data, it appears that current trading activity may be con- centrated more in particular market segments (e.g. more af- fordable, first-time buyer seg- ments) within the overall mar- ket supply," the report reads. Data provided by NSO and Djar indicates that there has been a resurgence in market ac- tivity as from the third quarter of 2020, with a rising number of transactions and increasing property volumes. "This may be an after-effect of pent-up demand and supply which had stalled over 2020 Q2, but also a possible outcome of both development projects still introducing substantial supply to the market and re-incentiv- ised property demand/transac- tions," the report explains. The number of residential property listings remained on the rise in the first quarter of 2021, following a drop in the second quarter of 2020. According to the report, this increasing supply could be the result of socio-demographic factors, general market/eco- nomic sentiment, completed development projects, higher investment appetite, and mar- ket-supporting measures by government. Residential asking prices Figure A1 focuses on average regional changes in prices of individual residential properties in the Djar database (i.e. changes in asking prices of same property over time), relative to their value in the previous quarter (2020Q4) and in the same quarter of the previous year (2020Q1). The overall market mean asking price change was marginal at -0.2%. The regional breakdown 3 in Figure A1 shows that average price changes across regions seem to be lower when compared to the previous report's results, and even fallen into the negative territory for some regions (year-on-year basis). Specifically, the Northern and Northern Harbours regions recorded minor average price decrease relative to their values last year. Overall, asking prices have remained dominantly stable with all regions in Malta having registered an average price change below 1%. Gozo has maintained higher positive average annual growth (c. 2.0%), albeit at a slightly lower rate than that recorded in 2020Q4 (vs. 2019Q4). More property listings in the Djar database have experienced a price decrease rather than an increase. In fact, two thirds of properties which experienced a quarter-on-quarter price change have registered a reduction in price. From a property type perspective, townhouses and houses of character experienced the largest share of price reductions. Figure A1 Average change in prices by region, year-on-year and quarter on quarter QoQ change 21Q1-20Q4 YoY change 20Q1-21Q1 -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% Gozo Northern Northern Harbour South Eastern Southern Harbour Western 0.16% 0.12% 0.02% -0.52% -0.4% 1.92% -0.01% 0% -0.02% -0.14% -0.13% 0.34% 3 Regional analyses within this Report have been categorised as per the National Statistics Office (NSO) classification by local administrative unit. This can be found here: https://metadata.nso.gov.mt/classifications/LAU.pdf. When making reference to these rates, one needs to keep in mind that these regions include multiple locations with different characteristics and price ranges. The full Djar database goes into data per locality. On a €/sqm basis, rates have remained largely stable since 2019Q2 across all regions. Overall average prices in the market are 1.3% higher in 2021Q1 when compared to 2020Q1. This could be the result of incoming supply at higher initial rates per square metre, compared to existing property stock) 4 . The database also shows a downward trend in average property size of new properties, with a decrease of around -3.0% since 2020Q2. However, as illustrated by Figure A1, it appears that market entry asking prices are being kept at stable levels or with slight average reductions (overall average 0.15% reduction referred to earlier). Figure A2 summarises the range of prices/sqm by property type and region, ranging from €1,446/ sqm recorded for apartments in Gozo to €3,784/sqm for terraced houses in the Western region. In terms of changes from the prior year average values, terraced houses and houses of character have experienced the most price reductions. Given their upscale nature, the demand for these properties could have been impacted harder by the pandemic, such as the slow-down in foreign interactions. From a regional perspective, downward average price trends were mostly concentrated in the Northern Harbour region. The overall average asking price within the Djar database as at 2021Q1 stands at around €400k, with sub property type averages ranging from around €300k for apartments/maisonettes to €400k for penthouses and €600k for terraced houses and houses of character. By comparison, the average deed value recorded by NSO data on contracted prices in 2021Q1 is at €200k. Notwithstanding differences in the nature and components of asking vs. contractual price data, it appears that current trading activity may be concentrated more in particular market segments (e.g. more affordable, first-time buyer segments) within the overall market supply. Observed variation in average prices could to an extent be due to differences in property type composition between overall supply and final transactions and/or a large number of direct developments/direct from owner transactions which would be not be reflected in listings data. Region Apartment House of Character Maisonette Penthouse Terraced House Townhouse Gozo €1,446 6% €2,031 -4% €1,456 2% €1,851 13% €2,181 9% €1,753 1% Northern €2,321 3% €3,490 -2% €2,277 5% €2,835 3% €3,696 -3% €3,262 2% Northern Harbour €3,038 -2% €3,073 -6% €2,536 0% €3,031 -1% €3,438 -2% €3,277 -3% South Eastern €1,981 1% €2,264 1% €2,123 7% €2,231 3% €2,673 -5% €2,415 1% Southern Harbour €2,370 5% €2,960 -6% €2,381 5% €2,139 -1% €2,849 2% €3,026 4% Western €2,217 4% €2,913 0% €2,317 2% €2,592 0% €3,784 1% €3,105 0% Figure A2 Average prices/sqm by property type and region (with year-on-year changes) 4 This analysis is based on changes in overall average values of in the market, and not on the tracking on individual listing prices over time as in Figure A1.