Page 24 - Housing & Poverty In Malta With A Focus On The Southern Harbour Region

productive economic activity and which instead is lying idle while gradually diminishing
the potential of revenue-generating activities such as pro-poor tourism.

The third channel through which a link between housing and poverty exists relates to the
relationship between the price of housing and salaries and wages. If Malta is to remain
competitive as a destination in a context where international competition by other
economically-emerging destinations is increasingly harsher, it is paramount to keep the
cost of living (not that represented by the RPI or the HICP, but the real one which includes
payments for housing) in check and clearly allowing housing prices to go up unchecked
undermines the preservation of prices as well as the stability of the financial markets
given that most housing loans are financed through bank loans.

There could also be the potential fall in value (though thus far not in price due to market
imperfections probably relating to anti-competitive collusion by the construction industry
lobby) of existing housing due to construction. This is clearly a concern for poverty as
following the issuance of loans for housing, households are likely to be needing to borrow
money using that housing as a collateral at some stage in their lifecycle. If house prices
had to fall, indebted households might end up being unable to meet their financial
commitments and some might even end up being homeless.

This is in addition to the issues that have already been raised in this paper relating to
inhabited housing of sub-standard quality posing a hazard for people living therein, to
lack of investment in housing units already owned to maintain them in a serviceable
condition and to the affordability of households with low income that gives them access
only to ill-maintained housing, the purchasing price of which is likely to be suppressed
relative to housing units that are in good shape.

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