Last year for the first time, the number of Maltese households that owned their residence exceeded for the first time 150,000. This marked an increase of 30,000 since 2012. As a result, Malta is now the Western European country with the highest proportion of home ownership. At 80%, our rate dwarfs that of Germany, where just over 50% own their home.
Given the general agreement among the commentariat that house prices in Malta are shooting through the roof, this may be hard to understand.
There have been cases where the phenomenon of rising home ownership was halted and even reversed. Peter Saunders, author of “A nation of home owners” describes how the UK moved from having 70% home ownership to less than 65% in a decade and a half. He argues that this is due to a number of reasons; primarily that earnings and house prices have diverged, particularly for younger generations. Another reason is that social housing provision has fallen, such that over this period nearly a third of a million less units were available.
Luckily, it appears that these factors are not present in Malta.
The government’s active labour market policies cut youth unemployment from 14% to 9%. A study by the Central Bank of Malta suggests that “the growth of the services sector has benefitted the more highly educated younger cohorts” and pointed out that income tax data showed that younger individuals were the ones with the highest degree of income mobility.
Eurostat data, in fact, indicate that between 2013 and 2019 the median disposable income of Maltese persons aged between 25 and 49 (the core home buying cohort) has increased by nearly €4,000, or by nearly 30%. Across the EU the increase was less than €2,500, or 15%. Earnings growth, relatively speaking, was therefore twice as fast for the average Maltese. Looking closer at home, Italians aged 25-49 saw an increase in median disposable income of about €1,250, or less than 8%.
Between 2013 and 2019 the median disposable income of Maltese persons aged between 25 and 49 has increased by nearly €4,000.
As a result, while the share of housing costs out of disposable income for Italian households has risen to 16.6%, that for Maltese households stands at less than half, or 8.2%. The ratio for Maltese households is the lowest in the EU, where on average housing costs eat up more than a fifth of disposable income. Eurostat estimates that controlling for differences in purchasing power, housing costs in Malta are 45% of the EU average.
As regards social housing provision, the track record of the Labour administration has also been exemplary. A European Commission study carried out in 2013 had classified Malta’s social housing model as a residual targeted one with small scope. From about 0.3% of GDP in 2004, by 2012 expenditure on social housing had fallen to 0.1% of GDP, four times less than the EU average.
As a result, in 2013 there were 3,304 persons on the waiting list of the Housing Authority. The Authority had at its disposal 47 units to cater for this demand. The Authority also had to find a solution for 800 of its beneficiaries who were living in dangerous conditions. Eight years after, the waiting list is now down to 1,980. A drop of over 40%. And instead of 47 units to play around with, the Authority is currently building 1,700 new units. But even before these units come into play, already by the end of June more than 570 social housing units will be allocated from the existing stock, while another 240 solutions have been found through properties that the Housing Authority rents from private owners. For the first time in decades there is a real chance that Government will be able to deal with the bulk of the waiting list for social housing.
The newly achieved effectiveness of the Housing Authority can be grasped from two indicators. On the one hand, applications have more than halved, from 580 in 2017 to 238 in 2020. On the other, while the waiting list was reduced by just over 100 persons in 2017, it fell by just over 200 in 2020. The Authority is clearly becoming more effective in screening new applicants, and very efficient in finding quick solutions. Achieving this jump in efficiency despite the pandemic is a feather in the cap for those currently in charge of social housing in Malta.
The allocation to the Minister for Social Accommodation has risen from €10 million to €29 million in just 2 years, while the allocation for capital expenditure grew from €0.7 million to €4 million. Trebling this social investment in just two years is testament to the current administration’s dedication to this cause.
Continuing this twin approach, of raising incomes of younger households by more than the increase in housing costs and boosting greatly social housing, means that Malta should continue on its path to become ever more a nation of home owners.