Page 8 - Housing & Poverty In Malta With A Focus On The Southern Harbour Region

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a home in which to live healthily and comfortably , the concept of adequacy
encompasses such items as the access to temperature-conditioning devices, running
potable water, access to sewerage infrastructure and the like. Because, as per our prior
definition, adequacy or the lack thereof may only be established in relation to
requirements, adequacy takes on different meanings in special cases where persons with
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special needs, which term includes the elderly, are concerned .

Homeownership is nowadays the dominant form of housing among the majority of
advanced countries. However, there are still housing problems that have not been dealt
with, and they are becoming somewhat worse. Some have singled out and targeted the
commodification process as the culprit underlying the affordability problem. However, in
a capitalist economy, commodification is the common denominator of all saleable items
whatever they might be. This suggests that the analysis of the commodification process
is insufficient, and the problem must lie elsewhere, namely in the peculiarities of the
mechanisms of the land market.

The price formation mechanism, rent and land prices are intrinsically different from those
of other commodities. Firstly, they include a derived-demand component. That is to say,
they are partially regulated by the profitability of the activities generated on a given site.
Secondly, they include a market component regulated by the interaction of demand and
supply, as is common in most other markets. Thirdly, since the available land is more or
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less finite , and since supply is restricted in land-use (e.g. supply of land within a
particular distance from the city centre), the price mechanism together with the
excludability principle applicable to private goods, such as housing is in this context, will
make housing unaffordable for a number of people. In other words, there is a chargeable
premium for land convenience when it comes to the housing market. Anyone wanting to
take over a housing unit within a specific area which registers full occupancy will have to
do so by displacing someone else. It follows that rent and land prices in private housing
are established in a ‘hierarchical’ market and they are fundamentally different from the
prices of other, more conventional goods, which may be supplied on a vaster scale by
increasing the employment of the basic factors of production. This has been called the
use-monopoly of land ownership.

What is more, land ownership disrupts the free market mechanism in another
fundamental way, namely that when it comes to the supply of land, such supply depends
on the willingness of land owners to rent or sell their land. Continuous supply is
incompatible with land ownership and the land market is essentially supply-restrictive.
This has been called the ownership-monopoly of land.

8 Technically speaking this statement is not right since housing units are also bought with the intent of
holding them as assets. However, since this need not concern us in the context of adequacy, we will assume
speculative house purchasing and holding away.
9 This draws upon paragraph 60 of the Habitat Agenda, which reads “adequacy should be determined
together with the people concerned, bearing in mind the prospect for gradual development …”
10 Even if account of land reclamation is taken, the earth’s surface is finite and land space is, by
implication, finite too.

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