Housing Affordability
I recently co-authored a study titled ‘Housing Affordability in Post-Boom Malta: the Role of the Third Sector’ which has been published as an occasional paper under the umbrella of the Foundation for Affordable Housing. Below I reproduce the introduction of the occasional paper which outlines what the study set out to achieve. The full version can be accessed here.
In the current local discussion about housing, there has been an increasing concern about affordability, particularly since the onset of the property boom that saw house prices doubling over just ten years.[i] The major concern is that prospective first-time home buyers are being priced out of the market. However, careful consideration of the various factors that have shaped the Maltese socio-economic landscape suggests that affordability may be an issue for a much wider group.
Prospective home buyers may include individuals that have recently gone through a divorce or separation, as well as those that had previously chosen to rent but are now interested in transitioning to homeownership. These groups have characteristics that differ from those of the typical, usually young, first-time buyer. They, therefore, merit individual consideration in the formulation of government policy, and initiatives by non-profit organisations, that aim to mitigate the housing affordability problem.
Furthermore, affordability concerns may also arise for individuals that have already purchased their home. For example, individuals that own a house, but have an outstanding loan, may find themselves with inadequate left-over income for non-housing consumption after meeting their monthly debt repayments. The high inflation rate that prevailed over the past 18 months made this more likely,[ii] and the situation may worsen if interest rates on outstanding loans were to increase in line with developments in international financial markets, as they did abroad.[iii] Similar arguments may be extended to other groups (e.g., renters).
Moreover, the discussion on housing affordability should not be restricted to price affordability. If we are to elevate the discussion to truly account for the wellbeing of individuals, it should also take into account the quality of housing, including the physical adequacy of the housing unit, and overcrowding.[iv] To pick on just one issue, the media has been ripe with reports of migrants, particularly those from outside Europe, living in overcrowded apartments.[v] These house-sharing arrangements make the rental price for the individual renter more affordable but, at the same time, give rise to health and safety issues that make the living environment unsuitable for the individual.
Against this background, this occasional paper has two objectives. The first is to provide a concise overview of housing affordability in Malta. We do this through a selection of indicators primarily based on data compiled and collected by the National Statistics Office (NSO).[vi] The second is to provide a concise overview of the role of the state in contemporary housing policy in Europe; and to shed light on the role played by non-profit organisations in the fight against unaffordability.
The paper is not meant as an exhaustive in-depth analysis of all the issues identified above. Rather, the aim is to initiate a discussion on housing affordability that goes beyond the simple price-to-income comparison. It is the first of a series of occasional papers that the Foundation for Affordable Housing intends to publish over the coming years. The hope is that there will be a gradual exploration of the housing affordability problem that provides insights that will enable the Foundation for Affordable Housing to target those that are most in need.
[i] Grant Thornton and Dhalia (2022) The Malta Property Landscape: A True Picture.
[ii] Ministry for Finance and Employment (2023) Update of Stability Programme 2023-2026.
[iii] Financial Times (2023) Where are European Mortgage Holders Most Exposed to Higher Interest Rates? Where are European mortgage holders most exposed to higher rates? | Financial Times (ft.com)
[iv] Briguglio, M., Cassar, D. and Gravino, D. (Forthcoming) Housing, Neigbourhoods and Wellbeing. Eds. Briguglio, M., Czap, N.V. and Laffan, K. Wellbeing and Policy: Evidence for Action. Routledge.
[v] Magri, G. (2023) Overcrowding ‘due to discrimination’ of foreigners, Housing Authority suggests. Overcrowding ‘due to discrimination’ of foreigners, Housing Authority suggests (timesofmalta.com)
[vi] Other data sources include the Central Bank of Malta (CBM), the European Central Bank (ECB), APS Bank and the Housing Authority.
[i] P. Malpass, “Privatisation and Social Housing in the United Kingdom”, N. Houard, Social Housing across Europe, (Paris: La documentation Francaise, 2011), pp. 29, 32.