The latest EU-SILC survey, published by Eurostat, reveals a striking statistic: in 2022, 82.6% of Malta’s population owned their home – a figure that exceeds the EU average by 13.5%. 

At first glance, this suggests a stable homeownership landscape over the past decade. Yet, a closer examination unveils subtler, emerging trends in Malta’s residential housing structure that demand attention.

Between 2005 and 2020, Malta witnessed an almost fourfold increase (284%) in mortgage market flows, with a notable doubling from 2010 to 2020. This growth, outpacing most Western and Central European countries, signals a dynamic, yet, potentially challenging environment for prospective home-owners.

Despite an apparent low housing cost-to-income ratio of 10% in Malta – significantly below the EU’s 30-40% affordability threshold – this figure mainly represents households owning their homes with a mortgage or renting at sub-market rates. 

Consequently, it obscures the affordability challenges faced by those outside these categories, particularly young, aspiring homeowners.

A study published by the Central Bank of Malta in 2023 states that it is “evident that the lower along the income distribution a household is located, the more problematic it is for it to maintain homeownership and increasingly so.”

This is corroborated by recent analyses from firms like KPMG and Grant Thornton, alongside insights from the Foundation for Affordable Housing (a collaborative effort by the Archdiocese of Malta and the government). 

These sources illuminate the growing difficulties young Maltese face in meeting borrowing requirements for average-sized homes. The house price-to-income ratio between 2013 and 2022 remains alarmingly high, often out of reach for many households.

These analyses reveal that, while households with median incomes may appear comfortable with an average interest rate of 2.69%, the reality is starkly different for a significant portion of the population, especially young and single-adult households. 

For example, two young adults on minimum wage can afford a house priced around €145,000 – just 55.8% of the average property price. Similarly, a single adult with a median income can afford only 61.7% of the average-priced property, highlighting a severe affordability gap.

This gap in borrowing capacity impacts not only individual lives but also Malta’s societal fabric. Young couples delaying household formation and family planning due to housing unaffordability could lead to broader demographic and economic consequences, exacerbated by Malta’s already low birth rate.

In response to these challenges, the government, through the Housing Authority, has introduced various strategies, including the First-time Buyers Scheme and the Deposit Payment Scheme, to improve housing affordability.

Yet, these initiatives alone are insufficient to address the growing challenge fully.

The recent announcement by Foundation for Affordable Housing CEO Jake Azzopardi, pledging new banking solutions to assist middle-income individuals who are ineligible for government-funded apartments but unable to afford home purchases signifies a recognition of this issue.

As the discussion evolves, the anticipation of innovative solutions to this complex issue grows. The path forward demands a concerted effort from all stakeholders, including government bodies and organisations like the Foundation for Affordable Housing, dedicated to making homeownership attainable for more Maltese citizens.

Maria Callus

Maria Callus is an expert in banking, finance and forensic accounting.