Maltese families’ savings, skills, contacts key to property acquisition as prices soar

A study has determined the crucial role of the Maltese family and its savings, and its social networks, in countering the effects of rising property prices by helping young people get on the property ladder.

The Foundation for Affordable Housing’s ‘Entryways to Homeownership’, authored by Dr Dylan Cassar, finds that families are cushioning the impact of rising property prices and affordability through finance or skills transfers.

The study provides a comprehensive sociological analysis of Malta’s housing system, emphasising the pivotal role of the family in housing provision. “The broad measures like homeownership rates and housing cost-to-income ratios may not fully capture the dynamics of housing provision without considering the underlying family support systems,” Cassar says of the way housing support from families plays a part in shaping wealth and income inequality.

Using data from Eurostat’s Statistics on Income and Living Conditions (SILC) survey and the Household Finance and Consumption Survey (HFCS) from 2010 onwards, it identifies several key strategies employed by Maltese families to ensure access to housing.

For example, the data shows that 10% of properties acquired between 2010 and 2020 were gifted by parents.

The acquisition of property via gift or inheritance increased from 10% in the 2000s to 21% in the last decade. “This strategy, often involving the redevelopment of family-owned terraced houses into multiple apartments, enables younger generations to become homeowners in a challenging market environment. This method has become increasingly prevalent as property prices rise, reflecting a shift from market-based purchases to family-provided housing solutions,” the Foundation said.

Importantly, a significant 61% of young adults aged up to 34 live with their parents, one of the highest rates in Europe.

The average age of leaving the parental home is around 30 years, providing an extended period during which young individuals can save money by reducing housing-related expenses. “This arrangement supports savings for future down payments and other housing costs, also serving as a safety net for individuals experiencing marital breakdowns who may return to their parental home,” the Foundation said.

Families also provide finance to young homeowners in the form of cash, informal loans or guarantees on down-payments and loans: at least 26% of Maltese households received some form of gift or inheritance, with a median value of around €29,000. And 8% of households have received direct financial support for acquiring a home. “This is an expensive process in itself, and here is where the family in the past stepped in by either providing financial assistance or, more commonly, non-financial support related to the physical labour in the construction of the house,” the Foundation said.

Families in Malta have also provided social networks of skilled professionals in the housing industry, or favourable loan terms and reduced fees, as well as home maintenance help from skilled relatives.

“These strategies are influenced by social class and wealth inequality, with varying levels of resources available to different families,” the Foundation said.

“Consequently, access to housing is shaped not only by individual or household income but also by the resources within family networks.”

Malta’s homeownership rate in 2022 was 82.6%, significantly higher than the European average of 64.1% and other Southern European countries at 75.5%. This social dynamic also provides a safety net for those experiencing marital breakdowns.

“In past decades, initiatives led by the state and Church significantly boosted homeownership in Malta by offering land at reduced prices and subsidising loans for home construction. This was supplemented by family support in the form of financial and hands-on assistance, which was crucial in the construction of homes,” Cassar noted.

“However, today the landscape has shifted dramatically due to the depletion of undeveloped land and reduced direct involvement from the state and Church, leading to a reliance on family support, which exacerbates wealth inequality in access to housing.”

The Foundation for Affordable Housing supports the LoanUp programme, offering subsidised loan rates as a strategic response to the limited availability of affordable properties.