President of the European Parliament Roberta Metsola advocated for affordable housing when delivering her New Year's message for 2026.
The housing crisis affects almost everyone. However, to truly transform the system, we must focus on those at the most critical end and the issues most pressing for our economy. People are stuck in temporary accommodation with no chance to put down roots. Families have no place for children to play or do their homework. Young people are unable to get their first home. People are struggling to make ends meet as the cost of even the cheapest private housing takes up more and more of their income. People are deprived of the support they need to live independently. People living in poor-quality, expensive-to-heat homes.
It's a crisis that requires a multifaceted solution, ranging from focusing heavily on increasing supply through encouraging diverse housing types and supportive policies to addressing systemic issues like inflation and stagnant wages.
Affordable housing is increasingly difficult to come by in Malta for both home buyers and renters. The housing market has long been facing a severe affordability crisis, with soaring property prices and rents far outpacing wage growth, pricing out many, especially first-time buyers and young families, forcing higher housing costs (over 30% of income), leading to significant tenant strain and a call for more social housing solutions.
While affordable options exist in less popular areas or new developments, finding them requires strategy, as popular spots become unaffordable, and some landlords exploit the situation, creating an unbalanced market.
Our islands have become hubs of information and innovation, attracting highly skilled professionals, particularly in areas like technology. For years now, we have been having a large influx of foreign tech people with very high salaries who end up looking for a place to live very quickly and very centrally located, with the consequence that they push other people, especially young couples, out of the market.
The proliferation of short-term rentals can, to a certain extent, be blamed for housing shortages, prompting some of our politicians to consider restricting short-term rentals, but I am doubtful that such measures alone can solve the problem, although they can be part of the solution if complemented by other policies to bring more rental properties onto the market.
Housing and rental prices continue to increase steadily, and for existing homeowners, rising house prices have been a windfall. This wealth creation has benefitted low-income homeowners as well, particularly since housing tends to make up a large share of their assets.
Meanwhile, those with second homes in tourist hotspots have also seen gains from rising values and strong rental demand. For some people, like those providing accommodation, having a second home that you can rent has been a huge benefit.
But affordability remains a concern for others, especially young people, renters, and first-time buyers.
The underlying factors driving the affordability crisis are rooted in structural shifts spanning recent decades, including rapid urbanisation, a decline in public housing and a lack of state intervention as some of the causes. We can also point to the financialisation of housing as a key to the crisis, as it has transformed it from a fundamental social necessity into an investment tool, stripping it of its intrinsic function to provide secure and dignified living spaces.
Logically, the solution to the housing crisis sounds simple: build more homes. But building more homes quickly and relatively cheaply faces various obstacles.
Malta's density means that we need to make the best use of the housing we already have by renovating old and dilapidated homes and apartments. Refurbishing buildings would improve living conditions and bring down energy costs. Renovations are expensive, however, particularly for homeowners. We need new, innovative ways to finance energy efficiency investments.
Social and affordable housing needs more money and a better regulatory framework. New financing models could be used to attract investment, but they need to be paired with public policies that aid the development of social and affordable housing. We must improve the legal and policy framework that encourages the creation of affordable housing providers. Finding new ways to blend grant funding with commercial funding will also help leverage private capital.
A number of countries around the world are constructing homes from low-cost materials instead of bricks and mortar to bring down the price of housing and speed up the building process. The Maltese construction industry could perhaps emulate such a move.
With a long-term plan, the government should ensure that housing costs rise more slowly than incomes so that housing becomes more affordable over time.
For too long, past governments have attempted to fix a systemic problem with piecemeal approaches. Any long-term national plan for housing will need to start with a broad view of the whole housing system. It must consider both the supply of and demand for homes, drivers of house prices and rents, and the incentives faced by housebuilders and investors. It must consider the housing and welfare systems, including how they interact, for those on the lowest incomes. It must take a long-term view of how the housing system is helping or holding back other priorities, such as improving health and wellbeing and growing the economy.
A long-term plan needs more than policies and funding. To succeed, it will need the right structures, incentives and institutions. The government should align resources, policies and institutions, working across sectors and with different partners, all in pursuit of the same goals.