Over the last two decades, practically every EU country has seen the price of property increase at a faster rate than wages.
One of the undesirable consequences of this phenomenon has been an increase in the number of young people who cannot afford to put their foot on the first rung of the property ladder. High property prices also affect – perhaps even more adversely – lower-income workers who can only afford to rent basic accommodation.
A study by KPMG has found that households on a median income could only take out a mortgage that financed 76 per cent of the median asking price for apartments.
This is shocking news to all who fret about our society’s well-being and are worried about the welfare of future generations. Not everyone has parents or grandparents who can fork out enough money to help them put down a deposit on their first home. However, everyone does have a right to aspire to be a homeowner, irrespective of their financial means or the prosperity of their families.
The reasons behind the shortage of affordable housing vary. In many countries, strict development restrictions, especially in large cities, create a supply bottleneck even if demand is not extraordinary.
In Malta, the property market dynamics are somewhat different. Over the last decade the Maltese economy has grown rapidly, partly because of the massive importation of both high-skilled and low-skilled workers, pushing up demand. On the other hand, planning regulations have been lax, allowing property developers to multiply the number of apartments available for sale or rent.
The solution to the challenge of housing affordability has so far been that of helping first-time buyers with fiscal benefits. At the same time, the government’s laissez-faire approach to planning and construction has encouraged property developers to build more and more and higher and higher.
Housing unaffordability is a significant cause of many of the nation’s social and economic ills
And what they build is often blocks of high-priced yet basic, even substandard, housing, causing so much damage to the urban and rural environment.
It is time for policymakers to understand why affordable housing matters. The first principle that needs to be acknowledged is that the provision of housing within reach of all workers is a moral and economic priority.
Building more social housing is only a very partial solution. Those on a median income do not aspire to social housing but to a higher standard residence they can afford to buy or rent.
Housing unaffordability is a significant cause of many of the nation’s social and economic ills. It lies behind many of the problems of poverty, homelessness, debt, family breakdown and mental and physical ill health.
Housing stress also has adverse effects on people’s life chances, as well as on local communities and the broader economy. If workers cannot afford to buy or rent a house, employers cannot recruit and retain the people they need, and productivity is affected.
Many foreign workers keeping our public health system and the catering industry afloat live in unsatisfactory, temporary accommodation because of the high rent demanded. Meanwhile, local young people either postpone starting a family or continue to live with their parents because they cannot afford to buy or rent a decent property.
To rebalance the housing system and provide affordable housing for all, the government needs to overhaul its economic model that aims for growth though massive importation of labour and land speculation disguised as productive development.
Affordable housing needs to become a national priority and be put at the centre of the country’s socio-economic strategy.