Please use this identifier to cite or link to this item:
https://www.um.edu.mt/library/oar/handle/123456789/33254
Title: | Property price misalignment with fundamentals in Malta |
Authors: | Micallef, Brian |
Keywords: | Housing -- Prices -- Malta Housing -- Valuation -- Malta Housing forecasting -- Malta Housing -- Prices -- Statistics |
Issue Date: | 2016 |
Publisher: | Central Bank of Malta |
Citation: | Micallef, B. (2016). Property price misalignment with fundamentals in Malta. Central Bank of Malta WP/03/2016. |
Abstract: | This paper computes an aggregate ‘misalignment’ index using a multiple indicator approach to identify under or over-valuation of house prices in Malta based on fundamentals. A total of 5 indicators are used that capture demand, supply and banking system factors: the house price-to-RPI ratio, the price-to-income ratio, price-to-construction costs ratio, dwelling investment-to-GDP ratio and the loan-to-income ratio. These indicators enter the index in ‘gap’ form, that is, as a deviation from their trends or long-run averages. The weights are derived using principal component analysis. Based on the Central Bank of Malta house price index, the misalignment indicator shows a period of overvaluation in house prices that peaked in 2006-2007. This disequilibrium started to be corrected following the decline in house prices, reaching a trough in 2013. Starting in 2014, however, the index started to recover such that, by end-2015, house prices were broadly in equilibrium. |
URI: | https://www.um.edu.mt/library/oar//handle/123456789/33254 |
Appears in Collections: | 2016 |
Files in This Item:
File | Description | Size | Format | |
---|---|---|---|---|
Property_price_misalignment_with_fundamentals_in_Malta_2016.PDF | 1.05 MB | Adobe PDF | View/Open |
Items in OAR@UM are protected by copyright, with all rights reserved, unless otherwise indicated.