Affordable housing and its challenges
- manuelschembri
- May 3
- 3 min read
Many townhouses and terraced houses are being demolished to make way for unaesthetic blocks of apartments. The government should have subsidised home loan interest payments.
Having a house to call home is one of our human rights. Home is the place to be.
Throughout the years, successive governments, through numerous initiatives, have sought to support young generations in getting onto the homeownership ladder. However, current economic and new emerging social realities are proving to be challenging.
Recently, a report published by the National Statistics Office (NSO) underlined a 5.2% price increase in property by the end of 2024. Data further revealed that, over the past nine years, property prices have risen by 65%.
These increases must be taken into consideration within a wider context, that of the ever-rising cost of living. The latest studies published by the UĦM indicate that, in the past three years, the cost of basic food items rose by 17.5%. On the other hand, although the annual basic salary has increased marginally, it does not come close to the percentage rise of property prices.
A single person earning a gross salary of €23,000 annually is unable to afford 90% of the current properties on the market. Similarly, a couple with an average combined income would still struggle to afford 60% of the current property, even with bank loans. The maximum that a bank can offer is often not enough to buy one’s desired property.
This unaffordability crisis is not only leaving our young people anxious but is having an adverse effect on our social-family fabric.
The current property market is displacing many locals from areas such as Swieqi, St Julian’s, Sliema and the surrounding areas. They are then, therefore, becoming no-go areas due to sky-high property prices that many are unable to afford.
Many townhouses and terraced houses are being demolished to make way for unaesthetic blocks of apartments. These soulless apartments are then rented out either to foreign workers or for short lets, with all that this entails. Thus, these localities are not only losing their streetscapes but are being overly commercialised and, alas, losing their community spirit and identity.
This unaffordability crisis is also contributing to social changes among our young generation that might have adverse consequences on our demographics.
Exorbitant property prices are one of the reasons young people are getting married and starting families at a later stage in life. Although many couples start out wanting to have children, their financial constraints and hefty bank loans are making them postpone parenthood.
The average age for having a first child is now between 32 and 35 years.
Sadly, some are also opting not to have any children, fearing they cannot afford them. Currently, Malta’s fertility rate stands at a staggering 1.08, the lowest registered growth rate within the EU.
To address this crisis, the Labour government launched a number of schemes, one of which was granting €1,000 cash per year to first-time buyers, up to 10 years, irrespective of one’s income. Such a grant is largely welcomed as an addition to one’s disposable income more than anything else.
Whilst acknowledging that such initiatives are good in themselves, throwing money at the problem does not always solve it.
In my books, direct government intervention on property prices is not only a short-term measure but also risks causing inflation of property prices. Robert Abela himself had urged sellers not to raise prices and “shoot themselves in the foot”.
In my opinion, rather than give first-time buyers a direct grant, the government should have subsidised home loan interest payments, especially during the first years. By paying the banks directly, sellers are discouraged to inflate their prices. Such loan subsidies should also be means tested, so as to target those in most need of support, giving subsidies according to one’s income.
Other indirect assistance that can be offered is granting VAT refunds on works/purchases carried out, tax reductions/credits to both sellers and buyers, rent-to-buy initiatives, ‘housing for youths’ initiatives, supporting green initiatives and more collaboration with banks to provide better rates and flexible deposit and paying terms.
It is in Malta’s common interest to support our young generation, not only to afford a house but also to enable them to turn their house into a home.
(This article was published on Times of Malta – 3 May, 2025)