In March, this newsroom reported how construction costs in Malta are rising due to the war in Ukraine and the lasting impact of Covid-19 on importation. It was again confirmed by the president of the Malta Chamber of Construction Management that construction material costs are still rising today.
This creates a number of issues. First of all, this means that costs for people who are doing up their homes could be higher than they used to be. This would affect the everyday Joe.
Secondly, this will also have an effect on the property market.
For example, when it comes to selling on plan, those who had sold property on plan are now facing rising costs to build those apartments, but obviously cannot raise the price to the consumer who already signed an agreement – and this is as it should be.
As for the new sales of properties on plan, it seems that this has been affected. One of the real estate sector leaders said that there has been a large decrease in such sales. While before 75% of a block would sell on plan, today it might be 20-25%.
Another said that this was affected before the war. “Cowboy developers that were selling on plan because they had to, as otherwise they couldn’t afford to go through with their project, might be wiped out of the equation. So most of the developers who will develop in the near future will probably be solidly financed, would probably not sell on plan, but sell when finished or wait until the permits are in hand.” – If this is the case, then this might not be a bad effect.
But, the quality of materials being used could also be affected. Yet another real estate leader said that the timing of all this is really bad as there was a shift starting to happen and many developers started to build with much better quality. “Let’s hope the increase in raw materials doesn’t have a U-turn effect on this.”
Some of the estate agents this newsroom spoke to also expressed concern with the idea of property prices rising, while others don’t believe that they will rise as a result, or won’t increase immediately. As an example, one of the agents said that first-time buyers are the ones who are going to be impacted the most by the increase in property prices as a result of the war in Ukraine. Another said property prices remained stable. Yet another said that developers cannot just increase prices due to the existing stock of properties on the market, and would first need those to sell.
Property prices are quite high to begin with, and it is already extremely difficult for young couples to purchase their first home.
Realistically speaking, if prices continue to rise as they have done, it could very well be that young people will be priced out of the market. Property prices are just too high in Malta. That is obviously driven by the market in itself. The government cannot put a cap on the market of anything of the sort, but it should continue to provide support and measures for those looking to buy a home.