Housing market developments in Malta

Housing market outcomes are the result of the interaction between user demand and supply of housing. For several years, additional housing demand exceeded additional housing supply leading to exceptional growth in selling prices. However, over the past two years, house prices grew at a slower pace. Thus, understanding the historical and expected developments in the demand and supply of housing is key for anticipating likely developments in the selling price of housing units.

The main drivers of ‘user demand’ for housing stems from first-time buyers, long-term lessees and short-stay visitors. This should not be confused with ‘buyer demand’ which represents those that purchase a housing unit either for personal use or to rent it out.

The additional demand for housing units by first-time buyers remained relatively stable over several years and is estimated to average around 2,500 units per annum.

The demand driven by long-term lessees mainly stems from foreign residents working or retiring in Malta. These increased significantly since 2017 and, by 2019, 100,000 out of a 500,000 population were foreign-born living in Malta. Such was their increase, that additional demand for housing...