The recent survey on household finance and consumption published by the Central Bank of Malta has punctually evidenced the glaring paradox characterising present times in Malta, that of a country where remarkable economic growth is being accompanied by increasing social discomfort.

The study exposes two fundamental realities.

First, despite the assumption that the influx of foreign nationals would have finally inverted the trend of the declining proportion of rentals, it was homeownership that continued to register growth. With 80.2 per cent, the highest-ever recorded rate in history, the increase was expectedly driven by homeowners with a mortgage loan.

The second significant fact is that, although the median income rose by 10 per cent over 2010 (the increase being predictably more pronounced in the higher income brackets), households have be-come more indebted and able to save considerably less than the same reference year.

In the light of the fact that, as recorded by the Central Bank in 2015, advertised property prices increased by 6.3 per cent over the previous year, these statistics suggest that financial distress is slowly penetrating the middle classes.

The decisive effect of increased migration on the affordability of the private rentals has for long been a known fact, yet, so poorly regulated is the sector, that foreign nationals themselves (particularly households with dependent children) are opting to mortgage their residence, thereby augmenting the demand for property ownership.

This explains both the increase in the share of owners as well as the rising property prices.

The notion ‘economic prosperity’ must be redefined beyond the superficial reading of figures and numbers

The current situation is, therefore, witnessing increasing difficulties in accessing housing and one of the direct causes is the government’s failure to devise a pro­per housing strategy or, at least, to make allowance for the impact of increased migration on the well-being of certain segments of the population.

While focusing on the development of certain niche markets that necessarily required a substantial foreign workforce to thrive, the government failed to anticipate the effects such a population increase would have represented for renters and prospective homeowners. Ironically, the root of the problems faced by these struggling households is the same that has been spelling out the ‘success’ of our economy.

This also explains why we often come across tales of record profits and stories of unsettling deprivation.

The response by the government has, so far, been very poor.

Fiscal benefits to first-time buyers are being cancelled out by rising property prices, increased subsidies for tenants are being reabsorbed by rent increases and, despite the announced project on the construction of new social housing units, we still do not know how many of the 3,040 applicant households will be ultimately rehoused.

The situation is being aggravated by the inexplicably disregarded ‘old’ rentals crisis where protected tenants, in their majority elderly citizens, are being evicted from their rented premises due to the unconstitutionality of the regimes that guaranteed them indefinite protection at inconceivably below-market rents. The government has so far put forward no effective solution capable of mediating the interests of the aggrieved landlords and those deserving tenants.

Beyond the apparent economic success story, Maltese society is developing evident fissures bet-ween different income categories which, unfortunately, remain to date unaddressed. The solutions lie far beyond the much-needed regulation of the private rented sector in line with the models used in other European countries.

It lies in the reassessment of what we, as a people, consider to be a decent living standard.

It would then be the government’s duty to make sure no individual, for whatever reason, would slip beneath this threshold.

Ultimately, this also means re­defining the notion ‘economic prosperity’ beyond the superficial reading of figures and numbers.

Kurt Xerri is a lawyer and a housing researcher.

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