A long‐term analysis of housing affordability in Malta

Purpose - The paper aims at analyzing trends and principal causes of developments in‐house prices in Malta over the past 26 years, with a specific focus on the issue of affordability. This focusing on the strong demand for home ownership and interest from foreign buyers, supply availability together with its relationship to the high vacancy rate existing. Also delved into include the distortions in the rental market, sustainable housing measures, housing densities and high‐rise developments. Finally, noted is the implication on the use of housing as an investment asset in relation to trading on Malta's Stock Exchange Design/methodology/approach - A long‐term approach has been utilized to arrive at deductions. Comparisons undertaken taken mostly with small states. Findings - The present global credit crunch can offer some relief with regard to housing affordability for first time Maltese home buyers. Updating of restricted home rentals can lead to an improved working for the Maltese property market, with some of the large proportion of vacant units being released onto the market. Research limitations/implications - Based on data collected from National Statistics, together with data bases held in the practice of DHI Periti. Practical implications - It derives projections for likely future developments in this context and in the light of this discusses some policy options. Social implications - An improvement into the quality of life for Maltese households delved into, whilst providing measures for households not to fall below the poverty line also indicated. Originality/value - Gives original views on projections for the housing affordability index, together with noting that a large vacant property market for the Mediterranean region possibly creates minimal damage to its proper functioning.