Prices for apartments keep dropping, but MEPA permits just keep rising

The average price of residential properties fell at an annual rate of 2.2% in the last quarter of 2012, following a drop of 1.2% in the previous quarter.

The Central Bank's latest property price index keeps reinforcing something that all Maltese property observers have long been saying: it's a buyers' market, and prices show no sign of picking up, with developers struggling to get rid of old stock.

On the other hand, over the year as a whole, average property prices increased by 0.5%, as a rise in prices in the first half of the year offset the declining trend in subsequent quarters.

The annual drop in the overall index during the fourth quarter reflected diverging movements in prices of different segments of the residential property market: whereas prices for maisonettes and terraced houses increased on an annual basis, those for apartments and property in the "other" category, which consists of townhouses, houses of character and villas, dropped.

During the quarter under review, asking prices for apartments, which make up just over half of properties surveyed, registered an annual drop of 3.2%, a larger decline than in the previous quarter.

Advertised prices in the "other" category fell by 0.9%, owing to a drop in prices for villas and for houses of character.

In contrast, during the fourth quarter of 2012, prices for maisonettes and for terraced houses increased by 1.6% and 0.9%, respectively.

The measure of activity in the housing market is provided by the number of advertised properties captured in the Central Bank's survey, and permits for house construction approved by the Malta Environment and Planning Authority.

In the fourth quarter of 2012, the number of advertised properties in the CBM's survey fell by 7.9% on a year earlier, to just below 1,500. This overall fall was the sixth consecutive one, with the decrease broad-based across all surveyed categories, except for houses of character and maisonettes.

Meanwhile, the number of building permits issued by MEPA rose by 4.9% in the fourth quarter, compared with the same period of 2011. The rise was due to a higher number of permits issued for apartments and for maisonettes. In contrast, the number of permits granted for terraced houses and other property categories dropped by 22.4% and 4.3%, respectively.