Why this story matters:
In a recently published report, the International Monetary Fund (IMF) warns that the booming real estate prices in Malta may “raise financial stability risks," fueled by, among other things, the so-called golden visas (passports for large investments).
IMF even went as far as saying that “introducing periodic reviews” for the controversial Individual Investor Programme (IIP) “could help curb the housing demand pressure”. The trouble with the IIP is that, as of today, it is exceptionally easy to become a Maltese citizen as long as you are willing to invest in the country -- 650,000 euros, to be precise.
The findings were announced soon after another study, commission by the Malta Developers Association, caused a stir. It claimed that Malta is not in a housing bubble but property for rent is subject to limited availability.
According to the study, average property prices rose by 24% between 2013 and 2016. Consequently, some of the most vulnerable social groups in Malta have found themselves living in tough conditions. Refugees, for instance, live in crammed spaces, sometimes without electricity,as reported by Lovin Malta.
In addition to the economic boom, Malta is seeing an increasing numbers of tourists. As a result, residential property is often converted into tourist accommodation because boutique hotels are becoming more and more popular. This does not make the housing situation any easier.
However, according to the Finance Minister Edward Scicluna:
"As long as banks remain cautious and only lend money where really needed and not for speculation, the industry will continue to grow healthily. When demand is greater than supply, it is only natural that prices will rise, just as they go down when supply is greater than demand."
Details from the story:
- A recent IMF report warns that the booming real estate prices in Malta’s may “raise financial stability risks”.
- According to a study by the KPMG, average property prices rose by 24% between 2013 and 2016. For single individuals earning median income and couples, where both partners earn minimum income, it is becoming more and more difficult to acquire property.
- Meanwhile, there is a boom for boutique hotels and guesthouses, with over one in ten of the new applications registered in Valletta.
- The capital of Malta will become the European Capital of Culture in two months.