The Sunday Times came up with a story how rents have increased over the past years. The increase, as reported on The Sunday Times, are nothing if not spectacular: a 38% rent rise for a one-bedroom flat over four years.

Since then, there have been at least two articles by people in the property business praising and gloating over this increase.

However, there are two sides of the coin.

It is undoubted that the increase in rents comes from the vast amount of foreigners that have come to live in Malta. That is surely an advantage: these newcomers work and add value to the Maltese economy. Their salaries are generally better than the average ones of the Maltese and they can thus pay higher rents. In return they get for free the Maltese climate, and all that makes up the advantages of living in Malta.

But there is a downside to this and we must not be carried away by elation.

There is a substantial amount of Maltese who rent their accommodation. Many live in rental accommodation dating from long years back and in this case the rent is usually very low, far too low, the owners would say.

But there are also a number of Maltese who are new to the rental market. These include young married couples, and also people who have separated and have to find an alternative accommodation. The way rents are increasing puts any rental accommodation out of their reach.

To complete the picture, there is a number of foreign persons, especially migrants, who live in cheap rental accommodation. What will happen when even these rents go up?

This is only one aspect. The above-mentioned articles and similar ones, all say these new rents prove that the economy is booming. But there is an alternative view to this. Consider the enormous amount of empty properties which do not seem to sell, either because of their state or because of other reasons. Owners have no alternative but to lower the price, hence cutting down on their expected profits or maybe even making a loss.

Concurrently, aided and abetted by the present government which has made Mepa (now PA) far more amenable to developer pressure, many Maltese have taken to property development. Some are big companies but others are smaller companies or even SMEs or family concerns. One can see this massive construction activity going on everywhere, as witnessed by the many cranes one sees, the many construction trucks on our roads, etc.

The conclusion is that while we already have a huge amount of uninhabited properties, this tidal wave of construction will give us an even greater amount of uninhabited properties. Unless, that is, the population of this country is not going to double, which is unlikely.

Given our present proportion of uninhabited residences, let us assume that at the very least we will have the same proportion on those residences that are being built now. Apart from all this stock, we will infallibly get a deteriorating standard of accommodation. We can already see this in the stately old houses that are being pulled down and the crammed apartments that are being put up instead.

The much-acclaimed growth that we are experiencing is partly based on this construction wave since construction carries along with it many ancillary works. In so far as the construction goes on, the economy will continue to look up but what will happen when all the units on construction are ready and waiting to be sold?

There must be a reason why the banks have stopped lending to construction projects unless they fulfill some very rigid conditions. And you will not get any bank repeating the euphoric speeches by the developers. Maybe that is why the prime minister had strong words about the banks.