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.: Central Bank Reports :.

Property Prices in Malta

These documents contain excerpts about property prices in Malta, mdina and valletta obtained from the Central Bank Annual Reports issued between 1998 and 2009. Excerpts taken from the Central Bank Annual Reports: http://www.centralbankmalta.com/site/publications2.asp

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View Report:           [2009]  [2008]  [2007]  [2006]  [2005]  [2004 - 2001]  [2000 - 1998]
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2006 Report

Table 3.7: Approved dwelling units

The slowdown in the rate of increase in property prices observed in 2005 continued throughout 2006, particularly in the latter half of the year. Advertised property prices rose by 3.7%, significantly less than the 10.4% recorded in 2005 (see Chart 3.3). This slowdown in house price inflation reflects a deceleration across most property types, particularly terraced houses, maisonettes and finished flats, the latter accounting for over 40% of sampled properties. In contrast, asking prices for town houses rose by 2.3%, after having declined in the previous year, while prices of flats in shell form and villas rose at a faster pace than in 2005.

Chart 3.3: Residential Property Prices

Household indebtedness to banks continued to increase during 2006, with the rate of growth of mortgage lending in Malta remaining higher than the euro area average (see Chart 6.4).8 However, although households remained vulnerable to shocks, the debt burden still appears to be sustainable. Indeed, while rising interest rates impinged on their debt repayment capability, this negative effect was offset by the positive influences of higher employment levels and

Chart 6.4: Mortgage Loan Growth

growth in national income. Affordability has also improved, while problematic loans have decreased further.9 Furthermore, households are still accumulating wealth, both financial and propertyrelated, thus indicating an increasing buffer to service debt. Nevertheless, although the financial position of households remains sound, and even appears to have strengthened during 2006, an acceleration in the debt burden poses some risks going forward. Since most mortgage loans are contracted at variable rates, households with a heavy debt burden, particularly those in the lower income bracket, become more vulnerable in an increasing interest rate scenario.

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223, Republic Street, Valletta. Malta
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