Housing affordability : a focus on young people in Malta

Abstract

Young Maltese people leave home considerably late in comparison to other EU countries ostensibly not by choice but for financial reasons. This chapter sets out to assess the potential of young Maltese people to rent or purchase their own home. The analysis considers lower-bound estimates for starting rents to be around €200 for a shared dwelling and €550 for a studio in Malta or a 2-3 bedroomed flat in Gozo. Average residential property prices are considered to be just under €200K. Two scenarios for net incomes among young people are considered namely, €800 a month and €1600, corresponding to incomes which are slightly above the minimum wage and average incomes respectively. Affordability is explored by examining the ratio of housing costs (rents or mortgages) to income as well as by examining living wages and residual incomes. The analysis also delves into other considerations, including the implications of family wealth effects, issues pertinent to foreign young people living in Malta, as well as considerations of the quality/crowding of the housing. The analysis concludes that it is unlikely for most young Maltese people to be able to afford moving out of the family home unless they receive family or state assistance, marry/cohabit or move to Gozo. The chapter concludes by outlining existing policy measures, exploring the application of the findings to other segments of the population and making further recommendations for policy and research.