Property prices in Malta continue to rise faster than incomes, placing significant pressure on first-time buyers and exacerbating regional disparities, a recent study by the Housing Authority confirms.
Despite government measures, problems with affordability persist, particularly with first-time buyers and low income earners, the study by Brian Micallef, Head of the Housing Authority’s policy unit shows.
The early 2000s saw relatively affordable housing in Malta. Between 2000 and 2003, the Housing Affordability Index (HAI) averaged 109, suggesting that homeownership was attainable for many.
During this period, property prices were modest relative to income. A finished two-bedroom apartment cost just under four times the annual salary of a typical couple and 7.2 times that of a single individual.
However, since 2004, the situation has drastically changed. From 2004 to 2008, the HAI significantly dropped, averaging 90, as property prices began to outpace income growth.
The price-to-income ratio rose to approximately 5.2 times the average annual salary for couples and nearly ten times for single individuals.
The global financial crisis of 2008-2009 further worsened affordability issues. Although Malta’s economy started to recover in the early 2010s, housing prices continued to rise, albeit at a slower rate than in the mid-2000s.
In 2021, the HAI was below 100 in several regions, including Sliema, St. Julian’s, and Valletta, with Valletta experiencing a particularly low HAI of 62.3.
Conversely, Gozo had a much higher HAI of 152, indicating relatively more affordable housing.
To tackle these issues, the Maltese government, through the Housing Authority, has launched various initiatives. The First-Time Buyers Scheme, introduced in February 2023, offers a €10,000 grant over ten years for properties valued up to €500,000.
The Equity Sharing Scheme supports long-term tenants in becoming property owners with tax relief and financial aid. Additionally, the Housing Benefit Scheme, which includes over 1,000 agreements, aims to lower housing costs for low-income individuals.
Despite these efforts, the affordability crisis continues to deepen, severely affecting the public. First-time buyers find it increasingly difficult to enter the housing market, and low-income earners struggle with the rising cost of living.
The study highlights the ongoing challenges in improving housing affordability, emphasising the need for more effective solutions to ensure that property prices do not continue to outstrip income growth, thereby exacerbating economic inequalities and social tensions in Malta.
Maltese ripping off Maltese, just another day in Mafialand.