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When it comes to investing in real estate in Europe, the choices are overwhelming. One can choose buying a property in a bustling megacity to those located in serene landscapes, far from the madding crowd. On top of that, each country and each region has its own unique charm and allure.
One thing all buyers and investors in real estate have in common the return on investment, not matter whether it is a property that is bought to flip or a long-term home for retirement or holiday purposes.
The EU’s housing market experienced a polarised 2023, with two distinct trends emerging. In the core countries of Western Europe, house prices rose moderately, reflecting a gradual economic recovery and a shift in preferences towards living spaces. On the other hand, the periphery countries, including Malta, experienced a more pronounced price surge, driven by strong demand from foreign investors and domestic buyers alike.
Croatia 13.7% | Bulgaria 10.7% | Lithuania 9.4% | Portugal 8.7% | Slovenia 7.4%
Poland 7% | Latvia 5.6% | Estonia 5% | Malta 4.5% | Spain 3.7% | Cyprus 3.2%
Hungary 2.8% | Ireland 2.8% | Belgium 1.8% |France 0.7% | Italy 0.7%
Romania 0.1%
Austria -0.3% | Slovakia -1.9% | Czechia -2.9% | Netherlands -4.3% | Finland -5.6%
Luxembourg -6.4% | Sweden -6.8% | Denmark -7.6% | Germany -9.9%
While house prices experienced a mixed bag of results in 2023, rents continued to rise across the whole of the EU. According to Eurostat, generally rents increased by 2.9% in the first quarter of 2023 compared to the same period in 2022. This outperformance of rents is due to several factors, including the limited supply of affordable housing, rising living costs and the growing popularity of rather renting than owning, especially among millennials and young professionals.
As we can see from the house price index earlier, Malta’s housing market stands out as a prime example of the periphery countries’ strong performance with around a 4.5% rise. The island nation’s strategic location, stable political environment and booming economy have attracted a surge of foreign and local investors seeking safe havens for their wealth. There is also a strong trend to purchase additional properties to rent out, as the demand in Malta continuously outstrips supply. Additionally, Malta’s relaxed tax regime and favorable immigration policies have further fueled demand for residential property.
Foreign Investments: Malta has emerged as a popular destination for foreign property investors, particularly from neighboring Northern European countries, seeking tax-efficient investments and a high quality of life.
Rising Tourism: The resurgence of tourism in Malta for 2023 has driven demand for second homes and investment properties, particularly in its coastal areas.
Limited Supply: Malta’s limited landmass and stringent planning regulations have constrained the supply of new housing units, further exacerbating the upward pressure on prices.
While Malta’s thriving housing market has generated economic benefits, it has also raised legitimate concerns about affordability and social equity. The rapid price increases have made it increasingly difficult for first-time buyers and low-income households to enter the market across the EU, potentially exacerbating social divides, but this has been addressed successfully by the Maltese government.
The Maltese government has recognised the need to address the affordability concerns arising from rising house prices. Several measures have been proposed, including:
Beyond the broader economic factors, several other factors could influence housing market dynamics in individual countries and also in Malta in the years ahead. These include population trends, immigration patterns and government policies on housing supply and affordability.
The overall trend of stabilising house prices is likely to continue for most countries in 2024, but the pace of decline for some could vary. The war in Ukraine, rising interest rates and economic uncertainty will continue to pose challenges for the overall EU housing market. However, strong economic fundamentals and pent-up demand in some countries such as Malta could temper any downside risks. That said, Malta’s real estate market has been an anomaly in the EU, surviving several global challenges since 2008 and even setting records for transactions during the recent pandemic.
When it comes to property for sale in the European Union, Malta is hard to beat for various reasons: variety, investment returns and most importantly, the fact that purchasing a property in Malta can form part of some select residency programmes and even smooth the path to obtaining Maltese citizenship through investment. Read more about this at https://franksalt.com.mt/malta-residence-programmes/
Frank Salt Real Estate prides itself as having been on the forefront of Malta propert for more than 50 years. As the oldest and biggest real estate group in the country, we assist not only buyers, sellers and investors in making the best decisions about commercial and residential properties every year; we also specialise in helping tenants and landlords regarding all aspects of rentals across Malta and Gozo.
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