The Unassuming Economist

A new IMF paper “(…) assesses vulnerabilities and risks associated with the property market in Malta. The data do not appear to point to a house price misalignment at present, yet a combination of demand and supply factors are likely to exert sustained pressures on house prices going forward. Moreover, elevated households’ indebtedness, combined with high and increasing bank exposure to property market, pose vulnerabilities to a potential negative house price shock. This calls for: (i) deploying targeted macro prudential tools as precautionary measures and maintaining prudent lending standards; (ii) closing data gaps to calibrate such tools and ensure continued in-depth monitoring of risks, (iii) carefully reviewing fiscal incentives related to property market; and (iv) alleviating financing constraints in construction sector to enhance supply response to price signals.”