The government should be wary of creating a housing bubble as it rushes to boost Malta’s property market, as this could lead to grave consequences, Nationalist MP Kristy Debono warned in parliament this evening.
Speaking during debate on the Budgetary Measures Implementation Bill, Ms Debono, an economist by profession, stressed the importance of ensuring that the Maltese property sector remains stable, as the stability of Malta’s banking system depended on it.
She noted that the government has been emphasising the need of a strong boost for the property sector, including through reforming MEPA and significantly reducing its tariffs.
While she recognised the need for reforms, since previous reforms did not necessarily produce the expected results, Ms Debono emphasised that the government should not signal that MEPA would be handing out a “blank cheque” to the construction industry. Apart from the obvious economic concerns, the MP said, this risked unbalancing the local property market.
The MP used Spain as a cautionary example, pointing out the banks’ overdependence on the country’s property market.
But the supply of property far exceeded demand, leading to delays in construction project and to a significant slowdown of property sales. When that housing bubble popped, she remarked, the consequence were catastrophic.
The MP recognised that the property sector “calmed down” during the previous government’s term, recognising this slowdown’s effect on its popularity.
She argued that it would have been simple for the previous government to artificially boost the construction industry – creating jobs and economic growth in the short term – but in the long-term, such actions endangered the country’s economic stability.
As she concluded, she clarified that “disciplined growth” in the construction sector is to be welcomed, as it would be in any other sector: but artificial short-term growth is inadvisable.
In his own address later in the day, Nationalist MP Toni Bezzina focused on a related topic – MEPA. The MP raised concerns about the decisions taken by the new government, including the appointment of a part-time chairman and plans to embark on land reclamation projects which could have a disastrous effect on the environment.
He also questioned Parliamentary Secretary Michael Farrugia’s assertion that MEPA’s environment planning commissions were expected to follow the government’s direction.
Earlier in the debate, another new MP, Paula Mifsud Bonnici, stressed that the Labour Party no longer had the luxury of simply criticising everything that had gone wrong under the previous government.
Dr Mifsud Bonnici argued that the PL’s “gloom and doom” rhetoric ahead of the election – which “gave the impression that Malta was bankrupt, with people starving and begging in the streets” – was aimed to distract the public from the government’s achievements.
But now that Labour was in government, she added, it had to start stating how it would fix the “mess” it argues was present. The new government is in its sixth week, but it still has not said anything, the MP said.
Parliamentary Secretary José Herrera and opposition MPs Michael Gonzi and Frederick Azzopardi also spoke during yesterday’s sitting.