Issue link: https://maltatoday.uberflip.com/i/1547510
maltatoday | SUNDAY •8 NOVEMBER 2026 How should a future property market look? PROPERTY is never just proper- ty. It provides households with a home, developers and land- lords with an investment, the construction industry with eco- nomic activity and owners with a means of building wealth. Precisely because property serves so many economic and social functions, it is important that the market evolves in a way that reflects the chang- ing needs of both the Maltese economy and the society it serves. At its core, a well-functioning property market should allo- cate a scarce resource, land and housing, efficiently across com- peting uses and generations. Persistent increases in property prices suggest that demand is expanding faster than supply. Rising incomes, higher em- ployment, greater borrowing capacity, foreign population growth and tourism have sup- ported demand, while Malta's limited land availability, plan- ning constraints and weak con- struction productivity restrict the supply response. If a mod- eration in house price growth is considered desirable, the eco- nomics is straightforward: de- mand must grow more slowly, supply must respond more ef- fectively, or some combination of the two must occur. Yet tomorrow's property mar- ket cannot be designed solely around today's pressures. It must reflect Malta's changing society. An ageing population, lower fertility, changing house- hold structures and a more di- verse resident population will inevitably affect the type and size of housing people require. The legislative and planning framework therefore needs to evolve alongside these chang- es, rather than remain an- chored in the household struc- tures and economic realities of the past. This also means thinking of property explicitly as a life-cy- cle asset. A home that suits a couple with young children may no longer be appropri- ate once those children leave or its occupants grow older. The market therefore needs sufficient depth and variety to provide homes suited to differ- ent stages of life, while mak- ing it easier for households to move between them as their circumstances change. A deep- er rental market could form part of this flexibility. Renting allows households to adjust their housing consumption without the transaction costs and long-term commitment associated with buying and selling property. Policy should consider whether the current balance of incentives between renting and ownership remains appropriate, particularly where expectations of capital appre- ciation make ownership over- whelmingly more attractive. Carefully targeted tax measures could help narrow the financial disadvantage associated with renting relative to ownership. Property has generated sub- stantial wealth. European Cen- tral Bank estimates suggest that its total value increased from around €84 billion in the first quarter of 2022 to approx- imately €116 billion in the first quarter of 2026. Yet over the same period, the number of Maltese nationals changed relatively little. This highlights the tension at the heart of the affordability debate: the same increase in property prices that makes existing homeowners wealthier raises the financial hurdle facing those trying to enter the market. A future property market will need to consider how accumulated property wealth can more eas- ily move between generations, whether privately through voluntary family transfers or, where appropriate, through the tax framework. There is a broader question about the role property should play in household wealth. Mal- tese households have tradi- tionally placed considerable value on home ownership as an effective vehicle for wealth ac- cumulation. But concentration in any single asset class carries risk. A household that earns its income in Malta and invests most of its additional savings in Maltese property has tied much of its financial wellbeing to one economy and one asset class. This strengthens the case for increasing the relative attrac- tiveness of alternative forms of saving and investment, such as pension funds, bonds and equi- ties, thereby encouraging more balanced household portfolios. A better-functioning market should minimise distortions and discourage behaviour that unnecessarily intensifies price pressures. Policy should favour productive, longer-term uses of property over speculative activity, while limiting incen- tives that encourage residential stock to migrate towards short- term tourist accommodation. Furthermore, in a small and land-constrained country, en- couraging the renovation, sale or rental of usable vacant stock should take precedence over additional development. So, how should a future prop- erty market look? There is no single model. What matters is whether the incentives facing households, investors and de- velopers produce outcomes consistent with Malta's longer- term economic and social needs. Where they do not, it is those incentives that should change. Malcolm Bray is Head, Econom- ics, BOV. The views expressed in this article are those of the author and do not necessarily reflect the views of Bank of Val- letta. Issued by Bank of Valletta p.l.c., 58, Triq San Zakkarija, Il-Belt Val- letta VLT 1130. Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is li- censed to carry out the business of banking in terms of the Bank- ing Act (Cap. 371 of the Laws of Malta). Malcolm Bray THIS IS A PAID COLLABORATION