Former Economy Minister says Malta can expect a housing crisis in five years

Tonio Fenech was speaking at a seminar on the rental market organised by the group Catholic Voices where he said that Malta's economic model will inevitably result in a crisis

Former Economy minister Tonio Fenech warned of a housing crisis within five years as a result of the country's economic model
Former Economy minister Tonio Fenech warned of a housing crisis within five years as a result of the country's economic model

Malta’s economic model could lead to a housing crisis in as little as five years, former economy Minister Tonio Fenech has warned, but Parliamentary Secretary for social accommodation Roderick Galdes thinks the market will regulate itself.

Fenech said he was basing himself on IMF figures as he introduced a seminar on the rental market on Saturday, organised by Catholic Voices.

One of speakers at the seminar, Joseph Bartolo from Alleanza Kontra l-Faqar, said that the inflation of rent and property prices is growing and making the gap impossible to bridge for median and low wage earners.

The recent white paper on the issue was a start to the regularisation of the market, he said. But this was not enough.

“There is the element of understanding that low earners are having problems to rent but the problem is not only increasing poverty in low income families, but also median or slightly above the median income families are finding it hard to buy a home.

“To afford a home as a first time buyer you need income of around €20-€28,000, this is for a loan of €120,000 and that doesn’t cover many properties.”

Simon Debono, the Secretary General of the Federation of Estate Agents, said that rents had increased fivefold in the past three years. “I have the data and I can prove it,” said Debono. “There has been a rush to hide the truth.”

“It isn’t the job of estate agents to take care of the poor.” he said, quoting a recent government white paper. Debono also warned of “workers in suits and ties living in garages,” saying he has a list of 2,000 people who are in this situation, of whom he had personally checked 200.

Caritas Director Anthony Gatt agreed that supply of properties must be increased, adding that wages were struggling to keep up with rising rent prices. “Its becoming very difficult to find rental properties at €400, €500 per month…There is a clear need for supply and the money allocated to this must be spent well to help people in need. The supply is crucial. Whether it is a cooperative, a partnership with the private sector, it is crucial.”

Social housing is an important pillar of Maltese society, said Housing Authority CEO Leonid McKay.  

“We have people who without state aid will be in poverty. I don’t think the solution is to downsize housing. Up till recently more people were on welfare. We increased benefits and the number went down because we helped them to find work. Talking about a smaller size to incentivise persons to leave social housing is not good, we must give them the keys and help them throughout. This is the only way to stop people from being dependent on the State.”

With regards to State aid in housing, he said the Housing Authority would be analysing applicants’ income using an internal mechanism in relation to what they are paying. “Its not a one size fits all approach. This will assist those who need it most.”

Speaking last, Parliamentary Secretary for social accommodation Roderick Galdes told the audience that the market would regulate itself.

Roderick Galdes fielding a question
Roderick Galdes fielding a question

“In the past we used to say that trade schools aren’t needed and closed them down. Today we are feeling the effects.” Malta needed foreign workers for the caring professions and construction industry in particular and this creates a demand for housing. “This is the reality of the market,” he said.

Galdes conceded that society is changing and single parent families were increasing, saying that it didn’t make sense for “policies to stay the same for 40 years.”

“In the past, we were using land… for social housing and handing it to people who could afford it even without the help of the State. Then we stopped building social housing.”
Galdes mooted the possibility of introducing the concept of moving social housing users on once they can afford a place of their own.

He advocated targeting social problems like drugs, gambling and then tackling housing those involved. “If a drug user asks me to give him a flat and I place him in a housing estate, the problem will just spread.”

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