The Annual Malta Residential Rental Study: Second Edition (2022)

Brian Micallef, Tiziana Gauci (and other members of the Rent Observatory)

Chapter 1: Two years after the 2020 reform: an overview of the rental market

The objective of this paper is to take stock of the private rental market two years after the introduction of the Private Residential Leases Act. It uses anonymized data from the rent register maintained by the Housing Authority to assess the size of the rental market, the characteristics of rental properties, contract durations and prices. By the end of 2021, the register had a total of 37,976 active contracts, representing an increase of 49% compared to the situation prevailing at the end of 2020. Some changes in contract types and duration were observed but the distribution of contracts by location, property type and size has remained very similar compared to a year earlier. Spatially, rents are highly concentrated in the Northern Harbour region, followed by the Northern region. Together, these two regions account for 70% of all registered contracts. Around two-thirds of all the long and short-term contracts in the register have a monthly rent between €400 and €899.

Chapter 2: Hedonic indices for registered rents in Malta

The availability of granular information on registered rents allows for an analysis of the evolution of rents over time. This requires the application of hedonic methods for the development of rent indices to account for the heterogeneity in housing quality and changes in the quality-mix of rented properties. This chapter develops several hedonic indices for registered rents based on the time-dummy variable approach and the average characteristics approach using the Laspeyres, Paasche and Fischer methods. The indices account for observable characteristics such as the property type, its location, size, and the type of lease. The models are estimated over a 24-month period from January 2020 until December 2021. According to these methods, registered rents have recovered in the second half of 2021, with the annual growth rate averaging between 2.4% and 2.8%. This contrasts to the situation in the first half of the year, when rents declined compared to a year earlier, which corresponded to the pre-pandemic period. The resulting registered rent indices exhibit high correlation with advertised rents although the dynamics between the two indicators require a longer time series to be understood better.

Link to publication: Residential-Rental-Study-2nd-edition.pdf (