Apartment prices rise 10% as KPMG warns incentives could fuel further increases

The median asking price of an apartment rose by 10% over the past year, reaching €350,000 in 2026, according to a new KPMG report.

This builds on an increase of 11% in 2025, when the median asking price for an apartment stood at €317,000. 

The 10% increase registered in 2026 equals an added €33,000 in just one year.

According to the report, median apartment asking prices have increased by around 32% since 2019, with price growth skyrocketing over the past two years following relative stability throughout 2023 and 2024.

At the same time, the average size of finished apartments decreased by almost 5%, lowering from 123 sq.m in 2024 to 117 sq.m in 2026.

The findings emerged from the tenth edition of the Construction Industry and Property Market Report, commissioned by the Malta Development Association (MDA) and prepared by KPMG.

The report based its findings on thousands of advertised asking prices between July and August, meaning they reflect sellers’ expectations rather than the final prices agreed between buyers and sellers.

Maisonette prices more than double since 2019

Maisonettes also saw a substantial increase, with median asking prices climbing by 15% to €426,000, compared with €370,500 the previous year. The amounts mark an increase of over €55,500 in a single year.

The report indicates that median asking prices for maisonettes more than doubled since 2019 with an increase of about 52%. At the time, median asking prices for maisonettes stood at approximately €280,000. 

The KPMG also noted that maisonettes, which were traditionally considered more accessible to families when compared to houses, are increasingly moving into a higher price bracket.

While apartment prices continued to climb, terraced houses recorded the sharpest annual increase in the residential property market. 

Their median asking price rose by around 16.8% in 2026, from €620,500 in 2025 to €725,000 in 2026.

Penthouses saw a similar annual increase to apartments, with median asking prices rising by 10.2% during 2026, from €413,000 to €455,000.

The KPMG warned that changes in the composition and characteristics of properties advertised for sale may influence the annual price movements recorded in its report.

North Harbour has quarter of apartment listings but highest prices

Significant price differences were also recorded between regions, with the Northern Harbour emerging as the most expensive area for apartment purchases.

According to the report, the median asking price for a three-bedroom apartment in the Northern Harbour region hit €687,500, compared with €440,500 in the Central region.

The figure stood at €425,000 in the North West, followed by €371,000 in the South.

At €275,000, Gozo recorded the lowest median asking price for three-bedroom apartments, marking a difference of €412,500 compared with the North Harbour.

The pattern was similar for smaller properties, in which the Northern Harbour again recorded the highest median asking price for two-bedroom apartments at 480,000, followed by €360,000 in the North West and €351,000 in the Central region.

Prices were lower in the South of Malta and Gozo, where two-bedroom apartments carried median asking prices of €292,000 and €271,000 respectively.

The most expensive one-bedroom apartments were again found in the Northern Harbour, reaching a median asking price of €280,000, compared with €195,000 in Gozo.

At the same time, the Northern Harbour accounted for almost a quarter of all apartment listings in its database, with a relatively even distribution of one, two, and three-bedroom apartments.

So, what about rent? 

Regional disparities were also evident in the rental market, where the Northern Harbour again recorded the highest median monthly asking rent of €1,600.

This marked an increase of €200, or 14.3%, from the €1,400 recorded in 2025, making it the region with the largest annual increase.

The Grand Harbour area followed closely at €1,500 per month, while rents in the Central region remained unchanged at €1,400.

However, the North West recorded a 3.7% decrease in median asking rents, from €1,350 to €1,300 per month.

The Southern region remained the cheapest among those analysed, despite a 4.2% increase which brought its median monthly asking rent to €1,250.

The report concluded that the gap between the highest and lowest regional median rents widened from €300 in 2025 to €350 in 2026.

Looking specifically at three-bedroom apartments, the Northern Harbour recorded the highest median monthly asking rent at €1,950, followed by the Grand Harbour at €1,800.

The corresponding figure stood at €1,500 in the Central region, €1,400 in the North West, and €1,300 in the South.

Gozo was excluded from the rental analysis due to insufficient observations.

Nearly three-quarters of rental listings exceed €1,200, none below €800

Remaining on the topic of the rental market, the report also found that 74% of apartment rental listings in the KPMG’s report were marketed with rents above €1,200 in 2026. 

Last year, the number stood at 60%, marking an increase of 14%.

The remaining 26% were priced between €801 and €1,200. No listings below €800 were recorded.

The report specified that the largest amount of advertised properties fell between the €1,201 to €1,600 monthly rental bracket, while listings exceeding €1,600 also became more common.

However, the KPMG stressed that the figures relate exclusively to properties advertised during the data-collection period of July and August 2026 and do not represent all active rental contracts in Malta.

Government housing incentives may be pushing property prices higher

Government first-time-buyer schemes designed to help people purchase their first homes may also be contributing to rising property prices.

While developers and property market operators generally agreed that government incentives are crucial in helping young people enter the property market, some warned that the financial assistance offered to buyers may already be factored into property prices.

This means that measures intended to make housing more affordable could inadvertently allow sellers to demand higher prices, potentially undermining some of the benefits offered to prospective homeowners.

The report noted that while such schemes may improve purchasing power in the short term, they could also place upward pressure on prices over time, particularly when the supply of available properties remains limited.

This could create a situation in which government incentives would need to become increasingly generous to remain effective as property prices continue to rise.

However, the industry did not generally consider government schemes to be a major driver of property inflation, instead pointing to land scarcity, rising construction costs, and sustained demand as the primary factors behind price increases.

The report suggested introducing measures aimed at increasing the supply of affordable housing, rather than focusing exclusively on financial assistance to buyers.

It recommended further research into the impact of individual government schemes on property prices, particularly to determine whether they genuinely improve long-term affordability for first-time buyers.

Nearly two-thirds of apartments beyond reach for lower-income couple

At the same time, regardless of first-time-buyer schemes, a young couple earning a combined annual income of €36,012 would be unable to afford nearly two-thirds of finished apartments for sale.

The report went on to examine housing affordability across different income groups, assessing how much prospective buyers could borrow and what proportion of advertised properties would fall within their budgets.

For a couple in their late 20s both working in elementary occupations, KPMG estimated a maximum property budget of €311,111, assuming a 10% deposit and a 37-year mortgage.

However, just 35.8% of finished apartments advertised for sale fell within that price range, leaving approximately 64% beyond their estimated purchasing capacity.

Both the average and median asking prices for finished apartments also exceeded what the couple could afford.

The picture was considerably different for a young couple in their mid-20s, both earning average incomes.

With a combined annual income of €54,768, the couple could theoretically afford a property costing up to €489,444, assuming a 10% deposit and a 40-year mortgage.

Under these conditions, 82.4% of advertised finished apartments fell within their estimated budget.

The findings highlight the substantial differences in housing accessibility between income groups, particularly for young people attempting to purchase their first home.

However, KPMG cautioned that its affordability calculations were based on specific lending assumptions, while additional expenses such as notarial fees, insurance, and taxes were assumed to be covered by the buyers' own resources.

One-bedroom apartments offer landlords better returns

The report found that one-bedroom apartments generally offered higher indicative gross rental yields than larger properties.

The highest estimated yield was recorded for one-bedroom apartments in the South at 6.2%, while three-bedroom apartments in the Northern Harbour recorded the lowest yield at just 2.9%.

KPMG attributed the latter to the comparatively high asking prices of larger properties in the region, which may offset the higher rental income they generate.

MaltaToday Managing Editor Kurt Sansone moderated a debate during the conference.