A study was conducted and issued today by KPMG focusing on the Construction Industry in Malta. This was commissioned by the Malta Developers Association due to the lack of public records/data available. It focuses on the industry’s effect on various aspects, such as social and economic, and also how it could affect trends in property prices. The study looks into housing affordability and gives an insight into the economic and social dimensions of the property market. It also considers some new emerging challenges, and proposes that MDA should engage with Government and other stakeholders to address these challenges proactively.
Speaking at a press conference held at the Auberge de Castille, MDA President Sandro Chetcuti said that there were two principal reasons why the MDA has for years wanted to conduct such a study:
“While as entrepreneurs we have foresight and go by our gut feeling, which is an innate gift, an art, we wanted this scientific study to back up our arguments in order to collaborate with those who are not similarly endowed / Secondly, we cannot afford to get carried away by our enthusiasm and we want to foster a climate where the property industry continues to flourish.”
The data has concluded that this sector represents 15% of the nation’s Gross Valued Added (GVA) accounting for a total output of €2.55 billion and also contributes to the creation of 37,275 jobs. This study, however, has also brought to light other interesting points with regards to construction.
Vacant properties in Malta are made up of:
- 42% being ‘seasonal’ or ‘secondary’ homes
- 58% being completely vacant
That being said, the majority of these ‘Completely Vacant’ properties are in a good state of repair
The construction industry has many drivers of demand, some of which being:
– Low interest rates
– The citizenship investment scheme
– A growth in disposable income
This is why the industry can have various economical impacts. The ‘Housing Bubble’ is one of the main fears brought about by this and is created through an increase in price matched by demand, while showing no signs of a supply glut (excess supply). That being said the study found no econometric indicators of an existing property bubble.
The study also focused on affordability for low-income households and based their analysis (and in with reference to their 13,473 listing on the property database) the following was concluded:
– A Single Individual (€14,400 NET)
Qualifies for a loan on a property with a max. value of €95,300 of which only 2.7% are available. These are primarily 1 bedroom properties in the area of Tarxien, Zabbar, Hamrun, Birkirkara etc
– A Couple (€17,600 NET COMBINED)
Qualifies for a loan on a property with a max. value of €117,000 of which 11% are available. These are primarily 1 bedroom properties in the area of Tarxien, Zabbar, Hamrun, Birkirkara etc