One asset class which the Maltese are very fond of is real estate. This love has been passed down from previous generations, which saw the value of their properties rise and rise as the years went by. Even though real estate remains a solid asset, individuals who are looking to start their investment journey must understand that the market today is far removed from where it was 50 years ago. Let me explain.
In the mid to late 20th century, Malta was still very underdeveloped, slowly recouping from the devastation suffered in the second world war. As the baby boomers grew up and became young adults, and expats, particularly from southern Italy, made their way to the Maltese islands, demand for property started to grow. Many Maltese realised that an opportunity was on the horizon and several local entrepreneurs began to buy land and develop it. The initial outlay was relatively affordable, even for those days, with sales or rents practically guaranteed for the newly erected properties. Realising how lucrative this market was, more inhabitants started investing in property and for most individuals this became the perfect investment which would see them, at the very least, retire comfortably.
Fast forward to 2022 and property in Malta has become very expensive and relatively scarce. Prices continued to soar, partly due to the constant increase in demand, but also the lack of regulation which encouraged property sales at high prices, contributing to the inflated valuations we see today.
What does this mean for young adults who are looking to buy their first piece of land/property? Coupled with the high interest rates being charged by Maltese banks for mortgages, and below average salaries earned in Malta, this market has become very difficult to access, and those who do manage to strike a deal will still see themselves paying very expensive loans for many years, hindering further investment for quite some time.