Where does your town rank in the Sliema Index? Central Bank compares Malta rental prices

Looking to buy property? A study exploring long-term housing rentals in Malta and Gozo shows Sliema as the, expectedly, pricier areas of the islands, while ‘distant’ Gozo is your go-to for a cheaper bargain.

But the study draws up a housing index, using Sliema property as a base, to compare real estate prices across the country.

According to the index, the cheapest rental properties with respect to Sliema were found in Gozo, where one-bedroom apartments average at a monthly asking price that is 64.3% less than a comparable unit in Sliema.

On the other hand, localities such as St Julian’s and Ta’ Xbiex return discounts at around 9.7% and 8.8% respectively.

But these pricier locations also house the highest concentration of properties. Over 35% of viable listings drawn up in the study were located in Sliema, St Julian’s and St Paul’s Bay, while over 50% of the properties included Marsascala, Swieqi and Msida.

The term “viable listings” in this study refers to adverts for rental properties observed for the first time during the month in which the data was being collected, or whenever a previously-observed listing had experience a change in price.

In 2019, roughly 16,500 viable observations of rental units were singled out.

Further research was carried out to determine how added amenities, such as multiple bedrooms and bathrooms, impacted the asking price of a property. Using a one-bedroom, one-bathroom Sliema apartment as a base, an increase of one bed to a two-bedroom unit led to a 25.7% increase in the asking price. For apartments with three or more bedrooms, the result was a 47.8% increase over the base property.

Similarly, an extra bathroom added to a unit causes the asking price to increase by 16.3%, while units with three or more bathrooms command a further 53.1%.

Different property types generate different premiums over the base category. Penthouses were often advertised with a 20.7% premium over an apartment in Sliema, while no statistically significant differences were found in advertising prices for maisonettes.

Single-room listings found on the market were around 47.6% lower than a one-bedroom, one-bathroom apartment, and most other property types returned a premium of 47%.

According to the data, newly observed adverts were on the increase over the past two years.

In August 2019, the number of newly observed rental properties shot up to roughly 950 after sitting below 600 in the previous month, and until June 2020 over 800 new properties were being reported each month, bar December 2019 which saw just under 700.

As the author of the study points out, this could indicate a growing preference towards renting out properties instead of selling them outright, and could further signal an increase in vacant properties following the COVID-19 pandemic.

Throughout most of 2019, positive price changes outweighed negative ones. Here, positive changes refer to an increase in the rental price, and negative changes represent discounts over previously advertised prices. But this effect began to taper off in the last quarter of 2019, when negative price changes began to feature in the job market at higher proportions.

This suggests that landlords were already more willing to accept relatively lower rents prior to the economic downturn brought on by the pandemic. Things came to a head in April last year, when negative price changes commanded around an 86.3% share of all price changes in rents.

There’s no doubt that the pandemic had its effects on the rental market. New data published by the Housing Authority found that 4,278 rental contracts were terminated during the COVID-19 partial lockdown, of which 45% of these contracts terminated without notice from the tenant. In 93% of these contracts, the tenant was of a foreign nationality.

Shaken but as of yet unstirred by the pandemic, the pre-1995 rent laws could pose a difficult challenge for the housing sector. Several families and individuals protected by these rent laws are now at risk of eviction as landlords have the opportunity to challenge their tenancies, after a 2019 court ruling declared the pre-1995 rent laws unconstitutional. The issue is less the economic effects that this will have on the rental market, but rather the social implications brought on by mass evictions.