A bullish rally in the real estate market
There were 1,354 final bills of sale relating to residential properties last month, which is 205 more than the same month last year.
This is good news to the ears of any real estate negotiator and breaks the mold that Covid has wreaked havoc in all sectors of the economy. The value of the final deeds, said the ONS, amounted to 290.5 million euros, 36.4% more than the value recorded in July 2020. However, the resumption of real estate sales is not reflected by positive news on the rental market.
Rental prices fell 11% as Airbnb rental owners switched to offering long-term rentals, adding more supply to this market. Anyway, we appreciate the publication of a Djar report in collaboration with EY.
This edition of Djar report includes an analysis of specific trends within Djar’s database in this context of real estate transactions. In addition to the analyzes of the average evolution of the prices charged and the tariffs per square meter, this quarterly edition presents an analysis of the market offer, extracted both from the Djar database and from public information.
This report provides an analysis of the asking prices for various types of commercial properties, with a more detailed focus on commercial properties. The founding report is detailed and deserves to be studied. From April, the ONS published the first Residential real estate transactions publication.
These data have enriched the publication of Djar study making it possible to identify and compare national data on promise to sell and final deed, from Q1 2018 These two data points represent a measure of market activity levels, that is to say transactions that are the realization of both demand and supply. It also indicates a strong recovery in market activity after the decline in the second quarter of 2020.
As announced in the report, he claims how final deeds of sale returned to pre-2019 figures. This observation may reflect “pent-up” activity that had been stalled during the Covid restrictions. It is also likely that this was the result of demand stimulus policies during this period.
Overall, the data analysis indicates a recovery in market supply reflecting the incoming supply from the development pipeline following the increase in development permits over 2015-2019, as well as pent-up activity that had been stranded in the months of Covid emergence.
The recorded increases in market activity (promises to sell and deeds) show that the corresponding market demand is also present, thanks to government fiscal measures aimed at stimulating / inducing the real estate market. Unfortunately, there is a shadow on the table as Moody’s confirmed a stable A2 rating, but downgraded its outlook from stable to negative.
The significant increase in the Maltese public debt burden, the addition of Malta to the “gray list” by the international anti-money laundering group as well as the risks for the post-pandemic recovery of the economy are the main factors behind the negative outlook.
It is not raining but it is raining in this regard; the IMF report did not soften its criticism by saying that although new budgetary buffers have been established, economic growth in the past has relied on large inflows of foreign labor (mainly repatriated during Covid) , which increased the pressure on the island’s housing, infrastructure and natural resources management. Can the post-Covid economy be the harbinger of a new wave of gentrification that will slowly drive up national rental values? Party apologists lyrically say that before Joseph Muscat’s abrupt resignation as Prime Minister it was the “best times ever” when the plebs cherished the claim that we were the best in Europe. .
Many threw caution to the wind and celebrated in restaurants and pubs as champagne flowed generously at corporate parties. In fact, pragmatists warn that during the “l-Aqwa Zmien“The gap between the big cats (sporting Ferraris, skiing vacations or sipping aged single malts on expensive yachts) and the working classes was widening (increasing inequalities). This golden period had recorded extraordinary growth before the start. of the pandemic.
The IMF is suing us to remedy our weaknesses, but really, as they say, Rome was not built in a day. No one can dispute that closures, curfews and the sharp drop in the number of tourists during the 16 months of the pandemic have resulted in an unprecedented budget deficit. This deficit has exacerbated the ineffectiveness of the elusive fallout mechanism caused primarily by the unprecedented cost of rescuing failing companies and the cost of leave plans.
The anomaly is that while Malta Enterprise recalls having saved 100,000 jobs on leave (almost 50% of non-state employees) after the tourist season resumed in June, most companies are complaining of staff shortages. Of course, the math doesn’t add up.
This is seen as a conundrum because if most workers were covered by leave plans and those who are currently signing up to work fell to 1,600, then a worker shortage cannot be justified. Another subject is the need to fight against the rise in the cost of living, in particular for low income and retirees. Now, in the shadow of another annual budget, there is a general feeling that the two-thirds capped pension mechanism, unless supplemented by external income, is not enough to help people to fall into the poverty trap.
To analyze this question, PKF designed a number of “one-to-one” questionnaires and conducted a confidential survey of residents of nursing homes housed in three government-run centers. Unsurprisingly, when we break down these data by age group or type of household, we see that the “well-being factor” mentioned above has not benefited everyone at the same rate.
One prevailing conclusion is that people are living longer and by 2030, the number in the 65 and over age group will exceed that of 15 to 24 year olds. This inexorably shows how society ages and will inevitably face challenges. in planning their retirement nest egg.
In conclusion, the budget deficit is expected to increase further this year to 12.4% of GDP, the highest in the EU according to current projections. Coupled with Moody’s expectations for a relatively moderate economic recovery this year, the finance minister’s pledge not to raise new taxes will be music to many.
George Mangion is a senior partner in an auditing and consulting firm and has over 25 years of experience in accounting, tax, financial and advisory services. His efforts revealed that PKF has been instrumental in building many businesses in Malta and has placed PKF at the forefront of professional financial service providers on the island.
George M. Mangion