I have written about the affordability of housing in Malta in the past. In one of my previous contributions, I showed how the increase of property prices outstripped the increase in wages by just under five times. In another contribution, I argued that although housing should not be provided for free, it should be made truly accessible to all segments of the population and housing should be considered as a social service. And in a number of other contributions, I claimed that in the property market, we have a market failure.
Today, I would like to go one step further. I would like to echo the words of Leilani Farha, formerly UN special rapporteur on the right to housing, that housing is a human right and that the housing market cannot be viewed like a real-life game of Monopoly. Farha was speaking about the situation in a number of countries; but these words apply fully to Malta as well. Housing needs to be considered as a human right in our country and this right needs to be enshrined in our constitution.
In Malta, we have gone through great pains to ensure that young people enjoy in an effective manner their right to education. This has been done through, among other things, free education up to the tertiary level and the provision of stipends to post-secondary students. This was further enhanced by schemes that involve a tax rebate for accredited programmes which are provided against payment.
These measures have avoided our youngsters the scourge of student loans, as has happened to young people in other countries. Abroad, student loans have become a millstone for young persons as they could still be paying back their loan well into their 30s. However, we have not avoided our young people from the scourge of unaffordable housing.
Increasingly, young people need to rely on their parents to get onto the property ladder, thereby using up their parents’ life savings which they would have been building up for the rainy day or for when they will retire. The impact of this can be that in the near future, our senior citizens would edge closer to the poverty trap as they would not have any savings to fall back on.
Increasingly, young people need to rely on their parents to get onto the property ladder
If they aren’t able to tap into their parents’ savings, young people have to accept bank loans which create such a heavy burden for them that they find it difficult to have children as they would not be able to afford them. One needs to analyse fully the impact of such bank loans once interest rates start rising. Others have not been burdened by bank loans but have had to accept sub-standard properties, which tend to lose value over time.
Once, a bank manager told me that a house is the biggest investment that one makes in one’s life. At the time he gave me this advice, it was certainly the case. Today, in a majority of cases, it is no longer so. This has happened because speculators (be they developers, be they estate agents, be they contractors) have factored in the future value of properties through the price tag they give it today.
Low interest rates, an accommodating regulatory framework and a possible lack of other investment opportunities have turned housing into a financial asset (just as equities, bonds, hedge funds, etc, are), and as a consequence, profit expectations increased and multiplied. Farha, who I referred to before, calls it the financialisation of housing.
She has launched an initiative in the European Parliament, presenting a set of recommendations that challenge the financialisation of housing, using human rights standards to lead the way forward. She may not have had Malta in mind, but we certainly need to consider housing a human right and have policies in place that guarantee this human right.