A N A LY S I S
24 · MONE Y
ISSUE 55
Jordan Portelli is an economist and a portfolio manager for a local asset management company.
DWELL(ing) ON THE PROPERTY BOOM
Economist Jordan Portelli analyses the realities of the current property boom and its sustainability.
Over the past few years Malta has experienced a boom in the property market, mainly triggered by economic expansion. In fact, data published for 2018 by Eurostat, the European Commission’s statistical office responsible to provide statistical information to institutions of the European Union showed that Malta’s real gross domestic product (GDP) growth was among the top five within the euro area at 6.7%. Among the contributors to this important figure is the property market. In reality, it would be interesting to identify the factors that triggered the current economic boom. As
with many other economic factors, property pricing is a demand and supply force. The demand aspect Looking at the demand aspect, one would certainly look at the current domestic situation, but also what the future expectations are in terms of demand. Factually, Malta has experienced a remarkable expansion in the financial services and gaming industry, which for 2018, accounted to circa 18% of total GDP. Both industries had their fair share in terms of the
value-added preposition and undoubtedly the property market wasn’t the exception. In practical terms, both industries employ a considerable number of foreign workers with the latter tapping into the rental property market, thus increasing the demand which, in turn, pushed up the prices of rent. However, a very important economic factor, the domestic unemployment rate, has also had a remarkable impact on the property market. Latest data released by Eurostat shows that the unemployment rate in April was the fifth lowest among the 28 member
