A study of the excessive property supply needs to be undertaken as once-peaceful neighbourhoods are transformed into “concrete jungles”, an NGO yesterday warned.

Policies should be introduced to reduce over-development while encouraging the rehabilitation of existing unused structures which, in turn, would provide work for the construction industry, Flimkien Għal Ambjent Aħjar said in a statement. The 2005 census unveiled 53,000 vacant housing units in Malta and yet, despite this, between 2005 and 2010 permits were issued for 47,000 more units, 95 per cent of them apartments, increasing the number of unused properties to approximately 76,000.

The number of vacant units is destined to rise further as many approved permits are built and more mega-projects are approved, FAA said.

The Malta Environment and Planning Authority had estimated the island needed only 2,000 units a year for new families, yet between 2005 and 2009 it approved up to 12,000 units per year.

Mepa’s “past failure” as a responsibile regulator, issuing policies that encouraged a “race to build” mentality, not only ruined towns and characteristic village cores but also led to a slowdown in purchases, with some buyers reluctant to invest since the glut diminishes re-sale potential.

“Who is to mop up the over–supply? Who are the thousands of speculator apartments to be sold to? Not to foreign buyers since in 2009 only some 300 sales involved foreigners,” the NGO said.

Replacing houses with apartments has the double negative effect of injecting more cars into residential areas and trapping toxic fumes in urban canyons created when narrow streets are lined by tall buildings.

FAA also cited the Central Bank’s 2010 Financial Stability Report which said that the current weakness in the property market poses a serious risk to the health of the Maltese financial sector as property represents a high percentage of banks’ loan portfolios.