Housing affordability in post-boom Malta : the case for the third sector

Abstract

As Malta’s house prices increased at rates faster than the historical average, the market solution to homeownership started falling increasingly short. Some prospective homeowners were priced out of the market, others were pushed into expensive rental housing, and others yet incurred housing costs that left them with inadequate income to meet expenditure on other essential needs. In fact, in 2022, more than 13,000 households had housing costs exceeding 30% of their disposable income – double what it was just four years earlier. And while the country averages around 3,000 first-time buyers per annum, house prices are so high that affordability may have come at the cost of lower quality. These housing affordability issues are partly the result of various policies adopted by successive government administrations that led to a shift away from the state to the private market as the main provider of housing; with the state retaining the role of supporting those residualised by the market. Within this system, faster than average growth in house prices has given rise to a group of low- and middle-income individuals whose housing needs are neither catered for by the private market nor by the state. At the European level, where the situation is no different from that of Malta, the debate is whether the state should simply accommodate the poor and the socially excluded (as it currently does), or to broaden its responsibility in ensuring adequate housing for all those for whom the market fails to deliver. This occasional paper contributes to this debate by identifying: (1) for whom housing is unaffordable; (2) how many are affected (where this is quantifiable); and (3) why a new approach to housing in Malta, which works through non-profit organisations, may be part of the solution to the housing affordability problem in post-boom Malta.