Construction output down by 5.3%

Malta’s construction output has significantly decreased and decelerated since the last quarter of 2010, specifically decreasing by 5.3% this year after an initial 2% decrease between the third and fourth quarters of 2010.

The figures released by the EU’s statistical arm Eurostat illustrate the worsening picture of the construction and real estate industry in Malta.

Even government revenue from additional taxation on undervalued property sales drops significantly this year, as the property glut makes itself felt.

Additional taxation stemming from the under-evaluation of property sold has taken a plunge since 2010, when government architects levied €1.9 million in additional taxes payable on under-valued property. The figure had been climbing since 2008 - an election year that produced a paltry €103,883 in this type of tax – ostensibly due to a go-slow directive from the government during the election year.

It then rose to normal levels of €1,241,899 in 2009, and to €1,924,243 in 2010.

However, for the first six months of 2011, the figure stood at €77,879, meaning that even if government income retains current trends, the annual figure looks set to stand at around only €150,000, a considerable drop from last year’s €1.9 million.

In the construction sector, seasonally adjusted production fell by 1.1% in the euro area2 (EA17) and by 0.9% in the EU27 in May 2011, compared with the previous month. In April, production increased by 1.2% in the euro area, but decreased by 0.5% in the EU27. Compared with May 2010, output in May 2011 dropped by 1.9% in the euro area and by 1.0% in the EU27.

The production index in construction approximates the evolution of output within the sector, broken down into building construction and civil engineering. For the Member States which produce the construction index, but do not provide data for the reference period, Eurostat estimates missing values in order to calculate euro area and EU aggregates.

Among the Member States for which data are available for May 2011, construction output fell in five and rose in eight. The largest decreases were registered in Slovenia (-9.8%), the Netherlands (-2.3%) and Slovakia (-1.3%), and the highest increases in Hungary (+6.5%), Poland (+3.7%) and Romania (+2.9%).

Building construction decreased by 0.7% in the euro area and by 1.3% in the EU27, after +0.4% and -0.8% respectively in April. Civil engineering fell by 1.2% in the euro area and by 0.2% in the EU27, after +1.3% and +0.9% respectively in the previous month.

Annual comparison

Among the Member States for which data are available for May 2011, construction output fell in nine and rose in five. The largest decreases were registered in Slovenia (-30.1%), Spain (-17.3%) and Bulgaria (-16.5%), and the highest increases in Poland (+24.7%), Sweden (+11.2%) and Germany (+8.0%).

Building construction fell by 3.0% in the euro area and by 2.5% in the EU27, after -2.0% and -1.4% respectively in April. Civil engineering rose by 1.6% in the euro area and by 4.4% in the EU27, after +1.5% and +3.1% respectively in the previous month.