Rents drop 11% in first six months of 2020, as COVID-19 squashes demand

A pronounced drop in rates for residential property rental was driven by a combination of reduced demand for and increased supply of rental units on the market amid the COVID-19 pandemic

Residential property rental rates fell by 11% in the second quarter of 2020, when compared to the same period in 2019.

Research conducted by economists at the Central Bank of Malta showed that COVID-19 led the annual growth of rental rates to turn negative in 2020, and advertised rental rates in the first three months of the year were between 3% and 3.5% lower than in the same quarter in 2019.

Results for the first two quarters of 2020 reflect the impact of containment measures worldwide, including Malta, to address the spread of the COVID-19 virus, with the drop in rates driven by a combination of reduced demand for and increased supply of rental units on the market.

The Bank’s annual Research Bulletin includes a detailed article explaining the development of a quality-adjusted residential real estate rent index, as well as an article concerning the linkages between house prices, inflows of foreign workers and domestic consumption.

It also includes a comparison of the results of Malta’s Household Finance and Consumption Survey with those of Euro Area Member States and other participating EU countries, and an extension of one of the macroeconometric models used by the Bank, known as STREAM.

The Bank’s innovative approach to analysing the residential real estate rental market rests on the use of ‘big data’ from publicly available sources so as to get a better understanding of the evolution of private-sector rents after taking into account quality adjustments.

The database now comprises 21,883 listings of advertised rental rates, and takes into account details concerning the type of property, location, size and other attributes that may have an impact on rental rates.