We sat down with Darren De Domenico, Director of Frank Salt Real Estate, for his assessment on what lies ahead for the real estate market in 2022.
2021 was another year of unprecedented uncertainty due to the pandemic and this created several challenges but also many opportunities. Notwithstanding the difficulties and concerns this brought about, such as the unfortunate negative impact on many industries, particularly those related to tourism and hospitality, real estate once again weathered the storm and the sales of property in Malta and Gozo exceeded all forecasts and expectations.
According to figures published earlier this month by the National Statistics Office in Malta, 2021 was indeed a record year. With over 14,300 final deeds signed, this represented a 30% increase when compared to 2020. The regions where the highest number of properties changed hands was in the South with 3,800 units sold, representing 26% of the total market and an increase of 28% over 2020. This was followed by the Northern Harbour and Central Regions with 3,700 sales. The Northern Region had 2,700 sales versus a total of 1,750 sales in 2020 which represents an increase of 52% for the area. Gozo had 2,700 sales, up by 18% and finally the Western region clocked in with 2,000 units sold, which translates into an increase of 39% when compared to 2020.
How people think
In 2021 we continued to experience a significant shift in the way people think about their homes which created further demand in the second-time buyers’ market. The value of the home now has new meaning to consumers, shifting from thinking about homes first for its fiscal value or as an investment to focusing on how our homes may accommodate many other uses.
Lifestyle is leading the way in buyers’ decision-making processes and will continue to do so into the new year and beyond. The remote and hybrid workplace revolution is also currently reshaping our industry and society as a whole. Buyers want spaces where they can spend quality time with their families, a home office that helps them to be productive when working from home and they also look for outdoor living amenities that can extend the living area of any home.
First Time Buyers
We also saw millennials step into home ownership which accounted for one third of sales during 2021 and this was also accelerated by the first-time buyer scheme introduced by the government which has been extended until the end of 2022. Through this, buyers pay no stamp duty on the first €200,000 in an effort to support young couples when purchasing their first home. As the first digital native home-buying cohorts, they expect solutions on demand, on their phones and a simple, easy experience.
Much of the real estate industry could be digitized even before social distancing spurred a radical uptake in digitization. The push toward modernization will continue, while more homes will be found online and virtual home tours will take the place of open houses. The emotional investment and industry-understanding that our agents at Frank Salt Real Estate can provide, will remain crucial to the home buying and selling processes. This year we will be introducing a new CRM system in order to remain at the forefront of the industry and we will also launch a new web site which will offer improved functionality, higher speed and will be even more user-friendly to meet our client’s expectations and improve customer experience.
Highly qualified real estate agents
2021 saw a shift towards customers preferring to work with highly qualified real estate agents, who can manage a transaction whether it happened to be a residential or commercial sale or a let and we trust the value of our highly trained and experienced real estate professionals will be even more evident in 2022.
If the past 12 months have taught us anything, it’s that it is impossible to predict the future. Whilst this past year was a challenging but also a very busy one, we believe we may start to see the market normalize to a degree for 2022. While sellers remain in a strong position due to high demand, especially in segments where the supply of particular types of property remains limited, expected price stabilization and the continuation of competitive interest rates bodes well for the entire industry. This will be further complemented by the recent introduction of new government incentives as announced during the budget: where tax and stamp duty on the first €750,000 will be waived when one purchases a property which is situated in UCA; or in the case where one acquires a property which was built more than 25 years ago and the property has been vacant for a minimum of seven years. The same incentives also apply when one opts to buy a property which has been built in accordance with local architecture. Furthermore, one may also be eligible to claim back up to €54,000 of the total VAT applicable to the total amount which was spent on upgrading and refurbishing such a property. All of these incentives will certainly be welcomed by buyers and vendors alike and should create further opportunities for the real estate market to remain bullish in 2022.
While the 2022 property market may be a bit cooler than that of 2021, particularly during the first quarter, we are confident it will still be another strong year. With all the changes and disruptions in almost every market, from supply issues and challenges in the hospitality and service businesses to volatility in stocks and shares and lower rates offered by bonds, the one constant in growth and stability has been – and will surely remain – in real estate.
Of course, whatever your property needs may be, now or in the future, we at Frank Salt Real Estate are here to help and support you to make the right decision and invite you to contact us or visit one of our branches in Malta and Gozo.
We expect a positive home price growth in 2022 for most areas of Malta and Gozo, but at a more moderate pace than the growth we have experienced in the past years. Such growth very much depends on the availability of properties which are currently high in demand, construction costs, affordability constraints for first-time buyers, interest rates and investor appetite.