Malta's housing boom going bust

Lucky I bought 7 years ago

Great find though Ricky

There is a fundamental flaw in the article - it implies that the govt relaxing planning controls helped pump up the property bubble - ie allowing more supply pushed up property prices - which is non-sensical

"Malta experienced a property price boom between 2003 and 2007 which coincided with a massive inflow of repatriated Maltese savings abroad during the process of Euro adoption."

it didn't coincide, but was caused by

Hi George,

I'm not sure if the cause really matters.

What is typical of a bubble is that the rate of inflating the bubble rapidly increases before it bursts and that is exactly what we can see happening in Malta , especially on Dingli Street in Sliema. Then it bursts with no warning.......

Malta is always a bit late ........even with a bubble -)))

Cheers
Ricky

well the cause matters, as it helps indicate the solution :-)

If the bubble is caused by lack of supply (eg in SE England), then a solution is to allow more building

In Malta the problem was the inability of the govt to control the black economy when the Lm was replaced by the euro. All that dirty money had to go somewhere, and fast, and it was laundered through the property market. The solution in this case is definitely not to relax the building controls, but to allow the property market to find its own level - if some property developers go bust, well, so be it - Malta has the British obsession with owning property, and this crazy idea that high property prices are good for the economy.

Hi George,

so maybe you can answer the question of who is actually buying or supposed to be buying all these unused/unfinished/ just started properties.

Is it really true that , as the money is 'black' the owners can wait for  20 or 30 years to sell there properties at an artificially elevated level?

Some think that the Chinese are buying or the Russians but that sounds like wishfull thinking.

It doesn't make sense .

Regards
Ricky