Housing affordability: understanding the issues and solutions

23rd October 2023

Dr Micallef stressed that the averages painted quite a very different story to the reality for those who fall between the cracks. Economic models establish that a household should spend no more than 25 per cent of its income on housing, but he stressed that even that might be too much for low-income households and might not leave them enough for their basic needs.

“This is why evidence-based decision-making is required,” he told the Malta Sustainability Forum (MSF) webinar on affordable housing.

MSF was set up by APS Bank four years ago, organising a series of events each year dealing with various aspects of sustainability.

The webinar looked into the supply and demand issues relating to housing, and possible social and economic reasons why people might not be able to afford a decent home. Dr Micallef’s research identified three main segments where this was prevalent: low-income households made up of one adult aged under 65; a single adult with one dependent child; and a two-adult household with three or more dependent children.

The webinar audience heard about the subsidies offered by the Housing Authority. Its CEO, Matthew Zerafa, said that these help around 3,000 households – two-thirds of which are Maltese.

However, these are only part of what it does. Examples were given of those whose circumstances merited a special approach. He spoke, for example, about a cancer survivor who could not buy his own home because he could not get life insurance to cover his home loan. The Authority’s New Hope Scheme was set up for such cases, offering the requisite guarantee. Other scenarios often required tailor-made schemes, from helping those whose marriages broke down late in life, to helping those who cannot save up the 10 per cent deposit required for a home loan.

Apart from the ability to get a home loan, the webinar audience heard about the property market and how, for example, first time buyers were being squeezed out of the market by second and third time buyers who were scooping up properties to rent out, with property prices rising much faster than incomes. This meant that first time buyers often had to compromise on the type of property they bought, as well as on the location.

One solution for this is to create reasonably priced housing for those who are not on welfare, but who nevertheless cannot afford to get on the housing ladder.

Another speaker, Jake Adam Azzopardi, CEO of the Foundation for Affordable Housing explained that the Foundation had been set up specifically to tackle this supply issue – with the Government and the Archdiocese of Malta as its founding partners – a few months ago as a social enterprise, rather than one aiming to maximise profits.

Mr Azzopardi said that 10,000 households were spending more than 40 per cent of their income on housing, noting that more information about the Foundation’s initiative and research will be available shortly.

APS Bank, which takes great pride in its community-centric value, works closely and proactively with the Housing Authority to create schemes. Panellist Miguel Calleja, Product Portfolio Manager at the Bank, said that pilot projects had helped 500 households to get on the housing ladder, showing that the schemes were effective.

The speakers discussed some of the major changes over the past decade or two, such as longer life expectancy, younger people moving out of their parents’ homes, people marrying later in life and decreases in the numbers of children. The expatriate population had also grown fivefold in the past decade.

The number of people in Malta who owned their property had increased from 75.5 per cent in 2010 to 81.9 per cent in 2021, while those who rented at market prices had gone up from just 1.5 per cent to 8.7 per cent. However, these figures do not tell the whole story, Dr Micallef stressed.

From the supply side, apartments had now become the prevalent form of dwelling, with a 33 per cent increase in the housing stock between 2011 and 2021, which brought it up to 300,000 units.

In her closing speech, APS Bank Chief Strategy Officer Liana DeBattista warned that those who were spending over half their income on housing were severely cost-burdened, meaning that their lives were impacted very negatively.

“It is heart-breaking to witness this injustice on so many families and individuals in our society. … How visible are these struggles? Do we stop to consider how many people experience these challenges on a daily basis? They can easily be your neighbours, your colleagues, people in your community. What is so shocking is that it can be hidden so well,” she said.

The webinar was also addressed by APS CEO Marcel Cassar; Hon. Roderick Galdes, Minister for Social and Affordable Accommodation; Ms Sorcha Edwards, General Secretary, Housing Europe; Dr Rachael Scicluna, Lead Researcher & Consultant, SOS Malta and Chairperson, Guardian of Future Generations; and Ms Charmaine Mangion, Chairperson, The Housing Development Fund.

The webinar was moderated by Dr Daniel Gravino, Resident Academic in the Department of Economics at the University of Malta.

For more information about the Malta Sustainability Forum and to watch the full recording of the session, please visit maltasustainabilityforum.com