House Price Growth

I recently participated in an event on the Maltese property market organised by Grant Thornton and Dhalia. One of the insights I shared was that “with a steady supply of housing units coming through, and slower expected growth in the employment of foreign workers, the downward pressure on house prices could persist over the next two years”.

Some have misinterpreted this to mean that house prices are expected to decline. It does not. It simply means that house prices are unlikely to grow at the rates that we were used to before COVID-19.

And there are two qualifications. First, the downward pressure on house prices would ease if employment grows at higher rates than forecasted by the Central Bank. 

Second, other forces affecting the housing market – such as interest rates, construction costs, landlords’ degree of indebtedness and other factors – may reinforce or outweigh this downward pressure on prices. In case of the latter, house prices may well continue to increase.

I wrote a short article in The Sunday Times of Malta about this point. You can read it here.