Page 7 - Housing & Poverty In Malta With A Focus On The Southern Harbour Region

Affordability relates to the ability to meet the expense of housing without impairing the
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ability to meet other ordinary and extraordinary expenses as may be expected to arise
during the time period within which the rent or loan repayment falls due, this usually
being monthly, quarterly, bi-annually or annually.

For the ends of coming to terms with affordability, we could think of a hierarchy of
essentials, similar in nature to that proposed by Maslow but adapted to housing, with
nutrition being the top priority and housing being the bottom one. This is illustrated in
descending order of priority from bottom to top in the diagram below. Housing is
affordable if, and only if, its rent value may be paid from the current revenue sources
after the other expenses higher up in the pyramid-like priority listing have already been
paid for.

Housing

Medicines

Clothing

Food

In order for affordability to be measurable, a benchmark against which to gauge
affordability has to be established. Banks consider a fixed percentage of total income to
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be such a benchmark . However, there is nothing scientific about such a benchmark,
which was established discretionarily and eventually petrified with the elapse of time.

Another approach could be that of establishing a secondary poverty benchmark excluding
housing expenses and to calculate housing affordability thereon. As per the calculations
of the present author, it is estimated that such a benchmark should be at around LM
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3,026.3 per annum for males and LM 2,212.4 per annum for females .

Housing adequacy refers to the state or quality of the particular housing unit’s sufficiency
for the requirement for which the same housing unit was bought. For this reason, because
housing units are bought or rented either with the intention of reselling or sub-letting,
with which we will not concern ourselves in this paper, or with the intent of establishing

5 Extraordinary Expenses, as per the accounting lexicon, are defined as those one-off expenses the
occurrence of which is haphazard and unpredictable.
6 The Bank of Valletta fixes such a percentage at 25%. For more details refer to
http://www.bov.com/pb_borrowingmoney_homelink.asp (accessed 12 January 2004)
7 Vide Appendix 1.

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