The report about the property market, published last Friday by KPMG, marks an irreversible paradigm shift with regard to home ownership in this country.

That most households in Malta are also homeowners will soon become a narrative of the past. For the younger generations, especially, the prospect of buying a home is turning out to be ever more grim as property prices keep soaring.

According to the KPMG report, households on an average income will only be able to meet 76 per cent of the cost for an average apartment. In Malta, an average apartment costs around €265,000. Compare that to the European Union average: €209,700.

Speaking of average income, the average gross salary in Malta is in the whereabouts of €21,000, whereas the EU average is about €27,000.

The KPMG report also shows that the average age of first-time buyers stands at 33 years. In the UK, considered one of the countries with the highest property prices in Europe, the average age for first-time buyers went up to 30 years last year and it was considered close to a national tragedy.

In Malta, average households don’t have a voice. The construction lobby, the property agents, the professions that thrive on property sales – they do have a voice. And they can always count on having the ear of the powers that be. So long as they keep building, selling and renting they don’t really give a toss about who they are selling or renting to.

They care even less about those who, despite having a pretty decent job, don’t earn enough to be able to become homeowners.

Let’s not forget that here we are speaking of ‘average’ income earners, let alone workers on short-term contracts, or those on the minimum wage, or those who are registered self-employed so that the employer pays them for services rendered without having to employ them full-time. Those don’t even need to bother going to the bank asking for a home loan.

Average income earners, because they work and don’t depend on the state, are hardly eligible for social housing. Long gone are the days when the state provided affordable housing to workers, whether by cheap rent or at a heavily subsidised cost.

The bitter irony is that those houses, bought cheaply back then, are now being sold to developers, torn down and rebuilt as blocks of apartments, each sold at more or less the equivalent of the price paid by the developer for the original house.

If the parents of that generation, who started their families in the late 1970s and the 1980s, had, through their hard work and zeal, put aside part of their savings to assist their children to start a family or a career, today’s parents can hardly afford such ‘luxuries’. It is already a feat to manage to run a household on an average salary, let alone save for the children’s future.

Reality is, the middle-class in Malta is getting impoverished

While superficially it seems that we have a better standard of living, in reality, when you scratch the surface, we are eroding the middle-class stability and well-being that was hard-earned by previous generations.

Because the ‘average’  households don’t have a voice – whether in the media, or with lobby groups, or in politics – the hardships and disappointments they have to endure rarely make it to the news; the illusion that the ‘average’ Maltese family still has the financial capital to consider itself middle-class endures. Reality is – and, bottom line, this is what the KPMG report shows – the middle-class in Malta is getting impoverished.

What’s happening in the property market is the result of inadequate and mostly non-existent regulation. Legislators always come up with the excuse that they don’t want to tamper with the markets (which is exactly what developers and the whole construction lobby want them to say). That the price for appeasing the markets is paid by honest hard-working citizens being short-changed by the state that should be protecting them, that remains unsaid.

It would be funny if it wasn’t tragically ironic that Sandro Chetcuti, lobbyist-in-chief for the developers, in the same event during which the KPMG report was launched, asked for more planning and regulation in construction without, of course, intending that such regulations should (heaven forbid) also include provisions to safeguard buyers from overinflated prices and restore a modicum of justice to this jungle of a market.

Let’s not forget that those who cannot afford to buy have to rent and, there, the jungle gets even thicker. Most of those who are forced into the rental market are forced to pay more in rent than they would have paid the bank for a home loan, meaning that they are paying way above 35 per cent of their income. In certain cases, rent takes up more than 60 per cent of their net salary.

It’s the creation of a new underclass that isn’t just affecting young people but also (for example) the middle-aged who are single and also those who want to start again after the failure of their first marriage.

If it were just a matter of the abstract principle of justice over the concreteness of money, one would not be so surprised that the state, besotted by the glitter of capital, shies away from addressing this problem. In the long run, though, the state will be faced with a problem of poverty that goes beyond an underclass without money and resources that has to be provided for.

Since this underclass will be mostly ‘in work’, unlike the traditional poor, the state will be faced with the additional predicament of having a demotivated, tired and frustrated section of the workforce that will impact the productivity and general morale of the country.

So, in the end, if the argument for justice isn’t compelling enough to elicit any action, in the interest of capital and long-term sustainability, the state cannot refrain from tackling this issue seriously.