It seems like our housing market is quietening, is huffing and puffing with tiredness after a 10-year building frenzy which has left Malta looking uglier and feeling dustier, which has raised prices almost threefold, and where more and more first-time buyers have been priced out of the market. Deals are still concluded but many of these deals are brought off by exchange or bartering.

There is too much property that is overpriced, or for which there are not enough buyers; interpret it as you will. Conversely there are too many buyers with perhaps too high expectations, who are not able to find what they want at the price they can afford. So the majority of sellers, who do not have to sell at all, are sitting on their property and many of the buyers who are looking are also standing by hoping that prices will fall, which is unlikely, at least unlikely to fall significantly because most of the sellers do not really have to sell.

This is really at the heart of our very bizarre housing market, a market so bizarre that oversupply does not bring down prices, and where the theories of economists do not appear to hold water. Of course these same economists couldn’t have foreseen perhaps, the hundreds of millions that came back into the country and which in many ways created an artificial housing market.

This, despite the fact that the banks have increased loan repayments to 40 years from the more traditional 25 my generation were used to. This had the effect of lowering monthly outgoings certainly, so the short-term pain lessened for a while at least, but essentially helped prices to rise as well, which has resulted in more long-term pain.

Everywhere I go I meet parents who wonder how their children will ever be able to afford a home unless they can help them by releasing some of the equity. Everywhere I go I meet young people who have gone to the bank and simply cannot buy, especially if they are only a one earning household, or a not yet, or ever ready to settle down single person. There are ever more of these. In fact the largest and fastest growing type of household is the one person household, as more people separate, as more people either choose not to or cannot marry, (often because their partner is married and in divorce mad and free Malta they are condemned to life as singletons!), and of course as more people grow older and a spouse dies.

This is in fact the century of the smaller household, a much smaller family of typically only one child, or of single people who are not officially cohabiting with anyone, and of the older person who can spend anything up to 10 years alone after the death of a spouse.

Our housing market is unhealthy for a number of reasons that have often been described, but essentially the supply is not matching the demand, and the private sector on its own cannot meet housing demand forever. Our homes and the cost of these homes do not match our new demography, and action needs to be taken to address this, both from a planning and an investment point of view.

Or at least the penny (that the private sector on its own cannot produce enough affordable supply) has dropped in the UK at least, where after years and years of under-investment in housing, post Thatcher and through the Blair years too, housing investment is about to take off in the same serious way it suddenly took off in post war ravaged Britain, where the few who survived the ravages of war had no homes to go to. The scenario is nothing like as dramatic now, but up to Margaret Thatcher it was considered normal for governments to invest in housing as heavily, relatively speaking at least, as they invested in health and

education.

Post Thatcher though housing became a Cinderella service from which it has not yet recovered. There have been many think tanks, many policy developments, and much made of private financing and private public partnerships, but in reality the supply has been insufficient, and not of sufficient quality either. So whole housing estates continue to be brought down, or expensively refurbished as this generation has to pay for the build ’em cheap, build ’em high or low, and badly, policies of previous cost cutting generations.

People also do sometimes stop and tell me the housing we build is too good for social cases, but at least we have not wasted our housing investment in Malta, we are not tearing down housing estates, we do not have hard-to-let sink estates. We just do not have enough supply! In terms of EU funding though this is turning out to be our downfall, as much of the funding seems to be directed to the kind of refurbishment of housing estates we do not require, and some lobbying from our Euro MPs would not go amiss in this area.

In Malta too the cent or the euro, not the penny, needs to drop. In Malta too governments and political parties of whatever colour are going to have to reconsider the relatively low non-investment in housing, which now urgently needs to be stepped up. Up to a short time ago, this relatively low investment was right because the private sector was delivering, and some form of housing for rent or for sale was generally affordable. This scenario though is changing by the day, and changing fast, and we need significant investment both to provide enough housing for free, or for rent (because low income people in Malta, or people in receipt of social security cannot afford to pay any real rental levels), as well as more shared ownership housing, which does not come free either and ultimately has to be funded by the government at least in part.

Every service is huffing and puffing as new regulations add a cost to everything, be they EU imposed or not. There was always going to be a cost to join the EU. Yes we are receiving funds but yes our services are now more costly to produce. And yes the private sector and the banks alone cannot fund a healthy sane and equitable housing market. Governments have to pitch in and pitch in more substantially than they have got used to doing for many years. That means part of the cake from taxation for housing too. It is a reality we have forgotten but a reality we now need to wake up to, as soon as we can, and without politicising the problem too much either.

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