How does anyone afford property in Malta?

ajwebber wrote:

Whats the deal on the property prices?

I'd be doubling my mortgage and almost halving my salary!  How do people living and working in malta afford a decent family home?
Ax

That’s why a lot of people rent, many of the locals have property handed down through the family.

Locals are being priced out - prices have surged in recent years, and there is a feeling of this being a bit of a property bubble, but as with such things, who knows when the market will peak.

Lots of newcomers to the island want to buy and settle, and in addition, there are many wanting to rent and not commit to purchasing - so locals are then buying flats to rent out. Just casually looking around, you can see there are literally 100's of flats being built at the moment ...

In addition, you have the government relaxing the planning laws to now allow higher blocks of flats to be built - so if you wander around places like Swieqi (one of many, but was there today), you will see house after house being torn down and converted to 5 storey blocks of apartments. Bonanza time for developers.

So in many areas, if you're looking for a family home, you're competing with those who would want to knock down and redevelop as flats ...

The price of my in-laws house has almost doubled in the last 4 years I'd say .... crazy. Note that wages on the whole are still low and not really increasing.

What's happening in cities all over the world is happening in Malta now. It's just Malta's turn.

It's not the foreigners, who are pushing the construction of new buildings, it's mainly the Maltese themselves. They do not want to live any longer with three or four generations under one single roof. The construction hype is exploding and this leads to some very serious problems. workers, material and machinery is limited and becoming more and more expensive, so the clever ones are starting to cut the cost ... and you can see the result everywhere on the island. This happened only 2 days ago a few blocks from where I live: https://www.timesofmalta.com/articles/v … ala.676708

This foto I made today and you can see the poor quality of the construction    It's against all applicable European and Maltese laws and therefore illegal. But who cares ... it's part of the charming mentality  


But they will fix it (as they always do), put a little bit of paint on it - and sell it for 250k. There's always a fool around with too much money in his pocket.


Summer will be interesting. At every bang of a firework people will be scared if maybe another building has collapsed 

ajwebber wrote:

How do people living and working in malta afford a decent family home?
Ax

From my consulting business, I could make some experiences how the locals can affort buying an overpriced property. I do not really understand the motivation, but that's not part of my business 

Example: A freshly married couple at the beginning of their 20ies decides to start their own family  . But they do not want to live in either parent's house, so they will take a loan and buy their own apartment (a farm- or townhouse, even in a desolate condition, is already far beyond any affordability). So they found a spacious 3 bedroom apartment in a block of 16 in Zabbar. The price is 280k. Their income together equals around 1800 (net) per month and almost no savings existing. Not a problem if you are Maltese, because there's a lot of family supporting you. The deposit can be collected from several family members and two of them are willing to act as guarantor for the bank loan, because the total household income of the both of them is too low. Everything's fine so far. With respect to the (future) monthly income and some extra expenses for the (future) kids, the credit period was agreed with 35 years (at least they know what they will be working for the next decades  ). This is how the Maltese system is working: The time is on their side! 

Mela, it seems everything sorted out. The bank requests documents of the apartment, so they ask the developer. It took almost 2 months to get all papers - for a finished building! Another 3 weeks later the bank turns down the loan request since the whole apartment block was built illegally. Note: A block of 16 units plus more than 20 parking spaces was built and finished without valid permits. 1/3 of the apartments (each between 150K and 300k fully finished) and half of the garages are already sold! That's a good business, not actually legal, but that only a minor issue in Malta.   

However, as I did my inspection of the technical parts, I've learned that PA never did any approval inspection and therefore the whole building never got any official acceptance documents. From official side, the whole building does not even exist, since the construction permit never was accepted or issued. This did not stop the (well known) developer to start and finish the building and sell the apartments.

For my clients, it was good luck, that they did not have the full budget and the bank did the background checks for them. In case some damage happens to the building, the insurance can step back due to illegal construction and in case you want to sell the apartment later on, the missing permit issue will pop up again and will cause troubles with your tenure. 

Be aware: Never ever assume that everything is correct with the building, regardless of the size and how it looks. Do not ask any local architect for his expertise - unless you know him personally - because he could be on the salary list of the developer. Do not ask the local council for any records of the construction, because they are the last to get any information. Always ask the bank for a loan, since they do very detailed checks on the developer and the permits. 

Nice detail: Two years ago, (ME)PA turns down another request for alterations at the famous Splash & Fun Park because of several existing illegalities "The illegal developments include a pool, rooms, excavations, several rides, timber structures and toilets not built according to the approved plans." 

Yes, there is a huge problem in the construction sector in Malta and a giant property bubble is building up. However, same as everywhere else before, no one is really paying attention to the warnings and call you even stupid if you have a critical approach to how things develop. Greed rules Malta. And this will lead to a property bubble similar to the ones in Poland, Spain or the US a few years ago. But one day there will be a massive crash and everything will come back to normal levels. It always starts with the same figures:


Another point: If you are interested in buying a house or apartment, try to find it at an early stage of construction to monitor the quality. When the house is already finished, ask an independent expert (architect, civil engineer etc.) - not a "handyman" - for an accurate inspection of the structure. Any electrical or plumbing installation can be rectified later on, same as tile laying, doors and floors, but once the building structure is weak, you'll get into troubles sooner or later.

Two years ago, after a delay of 6 years, Maltese Building Regulation Office finally managed to report the successful implementation of the mandatory EU Energy Performance Certificate. But they did not mention in their report, that the Planning Authority found a clever way to legalise illegalities by simply paying them off. I doubt that a weak construction or badly planned house will become more safe if you pay some money to the government. But what do I know 

Whenever you read stories about use of defective concrete, even for public contracts and collapsing parts of buildings even during construction and the fatal absence of safety awareness you could easily mix up Malta with any much less developed country. But when you see the asking prices for properties, you'll think the apartment must be located in Vienna or Berlin 

btw, heres's an interesting essay with an appeal for a stronger awareness of housing rights in Malta.

No, this is not in Malta as you can see on the superior construction standard 

Nange wrote:

What's happening in cities all over the world is happening in Malta now. It's just Malta's turn.

This.

Also heard from a local, and don't know how true it is, is that the Maltese government was giving tax breaks to Maltese first home buyers to get their foot in the door to the market. Problem is, developers felt people had more money in their pocket now and upped their prices (also due to demand I'm sure) to HIGHER than what the tax break was!

Everyone are entitled to first time buyer tax discounts, foreigners too.

JV321 wrote:

Problem is, developers felt people had more money in their pocket now and upped their prices (also due to demand I'm sure) to HIGHER than what the tax break was!

In 2009 government lowered the registration tax to bring newer vehicles to Malta. Owners and car dealers (sitting on an "old" stock) complained and therefore the government had to increase the annual road tax to compensate the losses of "older" imports. On a long run, due to the lower road tax those cars with "old tax scheme" are cheaper than vehicles registered after 2009. Owners and car dealers immediately took advantage of this and increased the selling prices - so they could profit twice: lower road tax as long as they are using their cars and a higher price if they want to sell it. Same as with the building boom, the majority of people have to pay extra for this. Some people are not very successful in thinking, buy an old car at an extraordinary price only to safe a few bucks on the annual tax not considering that most of the "old tax scheme"-bargains will require much more on repairs than you can ever save on lower tax. But fooling people is called profitable business ... I guess