Development of property in Malta needs to dramatically fall

The oversupply of property in
Malta is causing grave problems for the country’s property market and the
government should step in immediately to control the development of new
properties.  That’s the view of a
leading Maltese property expert who believes that the relaxing of planning
regulations in Malta over recent years has caused huge problems for the
country’s property market.

Huge supply of property in Malta pushing prices down

A recent Central Bank Financial
Stability Report has acknowledged the weak state of the Malta property market
at a time when more and more properties are coming up for sale despite low
demand.

The report states: “The slow-down
in the property market… raises credit risk associated with these projects. In
particular, additional supply of housing units may extend the period of lull in
property prices.”

Martin Scicluna, writing in Malta Independent, believes that the
oversupply of property in Malta is the leading cause for the current ‘parlous’
state of the property market.

He writes: “There is an
over-abundance of supply of properties, creating a buyers’ market and this is
pushing prices down.”  In addition,
competition from other Mediterranean countries such as Spain and Portugal is
resulting in fewer wealthy foreign buyers snapping up property in Malta.

Mr Scicluna reports that there
are 76,000 buildings in Malta lying vacant, up from the 53,000 identified in
the 2005 national census.  This
number is also set to increase as a pipeline of approved developments is
completed.

Mr Scicluna writes in Malta Independent: “The several millions
of euros of unproductive investment these empty properties represent is an
appalling indictment of government policy and a poor reflection of Mepa, as the
regulator, to bring matters under control.

“The argument for a freeze, or at
the least a steep reduction, in new development applications is now
unanswerable.”