Construction was and remains one of the major driving forces behind the economy. Most of all, it is a leading indicator of the country’s social and economic landscape. And the eighth edition of the Construction Industry and Property Market Report, recently launched by KPMG, served as an important indicator of where the country stands.
Notwithstanding Finance Minister Clyde Caruana’s claim that we don’t need to sustain the current rate of construction to prosper, the report highlights the fact that the industry will continue to play an important role in tomorrow’s economy.
The construction and real estate sectors (as of March 2024) account for 37,424 jobs, directly and indirectly. Moreover, in the first half of 2024, the construction industry generated €417.8 million and, in the same period, the real estate sector generated €496.4 million.
These figures speak for themselves, no matter what the finance minister says, and, to quote Michael Stivala, this industry remains a key source from where the government gets its money to sustain the health, education and welfare sectors as well as the infrastructure.
Yet, the report does not only serve as an indicator of the industry’s economic importance and value for Malta’s economy but also highlights other key issues which are quite concerning from a social point of view.
The report notes that there is a high demand in the local market for apartments; a property segment which has experienced an increase in prices of approximately 4.7%, with the overall average price at €374,070. And, while prices for apartments are on the increase, the report notes that property sizes are becoming smaller.
More concerning is the fact that, based on such commercial rates for apartments, a young couple in their late 20s, both earning a minimum wage, will face difficulties in acquiring a property and are likely to encounter limitations in terms of location and property size. The same applies to a single professional individual in their early 30s earning a gross annual income of €37,345, or a single individual in their 20s earning €22,407.
The construction and real estate sectors account for 37,424 jobs- Alex Borg
This is concerning, especially in view of recent figures provided by Caruana that one in six workers in Malta earns less than €1,000 a month, and that more than 2,300 full-time workers earn the minimum wage of just €835 per month.
Concerning when one keeps in mind that the median national salary for the first financial quarter of 2023 stood at €1,582 per month, translating to around €19,000 per year. More concerning when one also keeps in mind that 86,000 people were at risk of poverty, translating to almost 17% of Malta’s population.
This alarming reality for low-income earners is not limited to access to property but also to the residential rental market, with average asking rental rates for apartments experiencing a general rise in all regions in the past year.
The largest jump was observed in the North-West as rentals increased by 17.3% to reach an average of €1,194, from €1,018 in 2023. The Central, Southern and North Harbour regions also observed substantial increases of 15.3%, 15.9% and 10.5% respectively. The largest average rates were observed in the North Harbour region which reached €1,765, while the South remained the region with the least expensive average asking rates at €1,042.
These are alarming figures which further amplify the government’s detachment from the local reality, especially when the prime minister claims that Budget 2025 provides tangible support for families and promotes sustainable economic growth and social equity.
It makes no sense when the prime minister claims he is proud to be heading a government with a social soul that allows the economy to work but intervenes where necessary so that no one lags behind. Above all, it exposes the government’s inability to address key issues that truly make a difference in our quality of life.
Alex Borg is the Nationalist Party’s spokesperson on Gozo.