An economic assessment of the construction industry and the recent property boom in Malta

Abstract

The construction industry in Malta has always been one of the foremost industries in the Island compensating for a lack of industrialization. The great importance of this industry to economic developrrait is rarely appreciated. .t>eople otten think of capital in the form of machinery, plant and other typif ications of investment, but rarely in the form of a house. The role of capital formation is an inherent part of econanic growth. Basically, capital formation comprises two main components, namely buildings, plant and equipment. It is very difficult to assess the share of building costs in relation to total capital accumulation, but it is likely to rise steeply when the building industry is over-loaded. Since the Maltese construction industry is badly organised. and prone to bottlenecks, a considerable amount of such over-heating did occur during the recent boom.