Getting real about the true housing situation

It is very difficult to decipher the true situation in the housing market in this country because there are so many conflicting versions.

On the one hand you have real estate agents claiming that there is not enough property on the market to meet current demands. Meanwhile, those first-time buyers who are in the market for property say there is nothing available in their price range. They keep seeing the same properties being advertised which have remained unsold for a while, because the prices are over-inflated for what is being offered. In many cases the properties are either in undesirable locations and/or the property itself is substandard.  

So in this case the initial statement could be true with one caveat: there is not enough reasonably-priced property on the market to meet demand, especially given that the average Maltese salary has remained stagnant while property prices have soared sky-high. In some cases owners are convinced they can get much more for their property than it is actually worth and won’t be convinced otherwise. Developers knocking down houses and turning them into apartment blocks have also interfered with the market with their wheeling and dealing.   

That there is a glut of empty properties still in shell form even as other apartment blocks are still going up, is starkly obvious to anyone who has eyes to see, and I keep wondering who these hundreds of people are, who are going to suddenly find enough capital to buy or rent them.

The rental market, meanwhile, is still cowboy territory, with rooms and even beds being rented out to those who are newly arrived to the country and who have no other choice but to accept these conditions. In fact, a recent FB thread on this issue pointed to the fact that many landlords are not accepting Maltese tenants because the latter tend to know their rights more than a foreign tenant.  

Public consultation on the white paper on rent reform ended in November of last year, but not much headway seems to have been made since then. The only concrete change which Minister Edward Scicluna announced in his Budget speech was that rent subsidies for those on low income would be raised from €3,000-€5,000 per year. He also mentioned a few incentive schemes, but as far as I know these have not yet been implemented.

Some landlords, on the other hand, were quick to make their feelings known about the proposed rent reform threatening that they would pull their properties off the market if new regulations removed any of their freedom to set contractual terms. At the time this was met with sarcastic laughter more than anything else with the suggestion that the Government should call their bluff because as many pointed out, there are so many empty properties that having only properly-regulated ones would still be enough.  

Meanwhile, on the other end of the spectrum are those who cannot even begin to dream of renting at current market prices, let alone buying – namely, those who are on the waiting list for social housing. According to a news report, the Prime Minister, Joseph Muscat, stated that in 2013 Government was faced with 2,783 applications for social accommodation, and the Housing Authority had only 40 empty residences.

Excavation to build 680 apartments has already started, while funds have just been provided from the Citizenship for Investment Scheme for a further 550 apartments in other locations.

This means it has taken almost six years to get these important projects going – personally I would have given something as crucial as housing a much higher priority, but better late than never I suppose.  

While announcing this project the Prime Minister said that he wants the country to move away from the idea of people acquiring “social housing for life”, and on the face of it I do agree with him. It is much better to give those in need a helping hand just until they get on their feet, so that they can help themselves by moving forward and becoming self-sufficient, rather than relying on the state. On the other hand, how does he expect someone on a low income to ever be able to afford the capital required to purchase their own home at current prices and thus be able to move out of social housing?   

It also did not escape the public’s attention that while Muscat is lecturing those who are disadvantaged that they should not expect handouts for life, his Government has given some very hefty handouts for life by doling out public land, OUR land, at cheap prices, to people who are already wealthy: namely Corinthia and DB Group, to name just two.

The present scenario, where you have all these properties at ridiculous prices and most people unable to afford them, simply does not make sense. In a normal situation, the market would adjust itself and the prices would start to drop until they become more realistic and affordable. However, there are those who keep insisting that prices will never go down because real estate is scarce and valuable, and that the recent noises about land reclamation are just another sign that this unsustainable situation will continue.  

If it does continue, then this “Labour” Government can pat itself on the back that it has finally moved completely to the right and has fully embraced a completely capitalist model more than any other Nationalist Government before it. The wealthy will just keep becoming even more obscenely wealthy while those at the bottom will keep sinking further down.

It is all reminding me of a film I saw recently, The Florida Project, which is based on the reality of stark poverty faced by many Americans. It shows down-and-out families living in gaudy, pastel-coloured run-down motels because they cannot afford to rent proper apartments. The manager makes them move out for one night a month because it is against the rules for them to establish residency. The irony of the film is that the grim, sad motels are located just a few miles away from the magic of Disney World, where middle-class families can afford to spend hundreds of dollars for just one day of fun.

Unless your eyes are averted or firmly closed, you too should be able to see the stark differences which already exist between the affluent lifestyles in some parts of Malta compared with the gritty reality of those who are barely getting by, just a mile or two down the road.