News • December 28 2003

Property market lull following budget uncertainty

Julian Manduca
The property market is experiencing what estate agents are calling a temporary setback probably linked to confusion over the budget measures.
The budget re-introduced tax on inherited property, a measure that was seen as hard on those who had just signed a promise of sale agreement (konvenju), and confusion as to the details seems to have caused prospective buyers to hold back. The drop in property sales could also be linked to stampede for properties before this year’s elections which saw an exaggerated rise in prices.
In an attempt to redress what was seen as an injustice, the Ministry of finance allowed notaries to gather all promises of sale, signed before budget date. They were allowed to register them by last Monday, 21 December to benefit from a flat 5 percent tax rate, rather than pay normal income tax rates which could be as high as 32.5 percent.
However, as often happens when people are unclear about a law the measures have affected prospective buyers. Even prior to the 21 December deadline indications of a lull if not a stagnation in the market became apparent. The Sunday Times, the newspaper that attracts most classified advertisements including property for sale, registered a mere six and a half pages of advertisements on December 21, compared with its usual ten to twelve pages.
Real estate agent Bernard Bugeja of Bernards Real Estate said that although sales were expected to continue as usual: "Enquiries fell tremendously in the two or three weeks following the announcement of a few laws affecting the property market."
According to Bugeja there has been no stagnation of the market, but "the budget had an impact on the general interest in viewing property.
"This however does not necessarily mean that the market will not pick up again. The period preceding as well as following an annual budget always brings with it uncertainty and to top it all Christmas and New year fall bang in the middle of the week," further disrupting things.
Edgar Mifsud of CityPro, a company that specialises in Valletta properties, said that whenever there is uncertainty the property market always suffers. "Following a budget, people are always uncertain, and the simple fact that there were some changes to laws affecting property was enough to cause disruption even if, for the buyers, the changes are minimal."
Mr Francis Spiteri Paris, of Perry Real Estate, said there has been no change or decrease in property sales since the budget: "the property market is not dependent on the inherited properties, and the market has been stable."
Spiteri Paris was upbeat about the prospects of the market for the future and said foreigners are coming to Malta and buying properties.