Rental prices in Malta today are almost double what they were in 2008

A larger percentage of the money spent by families and individuals living in rented properties, is being taken up by rent, rather than other daily expenses, when compared with households that own their homes.

The findings of the latest household budgetary survey (HBS) have now confirmed that in 2015, while property owners have benefited from the decrease in energy prices mandated by the Labour administration, those who had been renting a home have seen a drastic rise in rental expenses.

Rental prices skyrocketed in recent years, with access to affordable accommodation, now coming to the forefront in the national political discourse.

In fact, the National Statistics Office’s survey found that in 2015, 18.6% of household expenditure in rented dwellings was spent on “housing, water, electricity, gas and other fuels”.

But that amount was significantly lower for property owners, where 6.9% of expenditure went to housing costs.

 When compared to 2008, the difference between the tenure statuses of households was striking. Seven years ago, housing costs accounted for 11.2% of households’ expenditure in rental homes, compared with 7.5% in homes that were owned by their tenants.

That means that in 2015, property owners are faring far better than those renting property when considering their spending on housing and energy. The comparison with 2008, when energy prices were far higher, confirms that property owners today have benefited from the decrease in energy prices through the switchover to gas.

But the same cannot be said of people living in rented properties: the increase from 11.2% to 18% in housing and energy costs means another factor has crept in – the higher cost of renting a property today. The Household Budgetary Survey (HBS) is a widespread study carried out among a total of 3,691 households over a 12-month period between April 2015 and April 2016.

According to the 2015 HBS, the cost of housing in rented homes has surpassed transport as the second highest source of expenditure in 2015, almost equalling the household spend on food and beverages. Asked whether he believed the increase to be mainly driven by increased rental prices, Philip von Brockdorff, the head of the Economics Department at the University of Malta, said he believed it was.

He said that while the increase in rental expenditure borne out of the HBS was significant, this was not reflected in the Retail Price Index (RPI) – commonly referred to as the basket of goods – on the basis of which the monthly cost of living adjustment (COLA) is calculated.

He stressed that as a matter of policy, the weighting attributed to private rents was low, and not reflected in the RPI. “This might have made sense in the past, but with more youngsters struggling to buy property, the number of people renting is growing,” said von Brockdorff.

The HBS also found that, on average, household expenditure increased by 14.2% between 2008 and 2015, while average income increased by an average of 22%.

Also of interest was the fact that the number of households with dependent children decreased by 7.4% from 42.3% in 2008 to 34.9% in 2015. Malta’s ageing population, its declining fertility rate, and the fact that youths today are more likely to leave their parents’ home earlier could all be contributing factors to this observation