Page 9 - Housing & Poverty In Malta With A Focus On The Southern Harbour Region

Under such ‘double monopolistic’ circumstances, the land market is individualistically
stratified on the one hand, and is characterised by rising land prices, on the other, given
that demand for land increases in consonance with good economic times, even if for
speculative reasons alone. During such times, rises in purchasing power perpetually lag
behind. Furthermore, prices of other goods, like, say, computers, are falling constantly in
absolute terms due to technological improvements, whereas the price of land
continuously rises inasmuch as commercial banks accommodate the increase in liquidity
that this persistent rise depends on. Additionally, land is not subject to obsolescence,
wear and tear and depletion, except in a very few remote cases (such as in a quarry). This
makes land one of the most ideal types of asset.

In contrast to land, a housing unit is essentially a commodity not unlike any other
commodity commonly found in an economy. Therefore, the supply and demand for
housing constitutes a ‘normal’ market exhibiting no peculiarities. Notwithstanding this, a
building is normally spatially fixed (i.e. it cannot be moved away from the land it was
originally built on) and this explains the ambiguous character of property preference.

“Property ownership, not house ownership, has the mysterious character of land ownership…
Property ownership includes land ownership. The general rule that the price of a commodity is a
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compound of various costs which often fluctuate separately holds true for property.”

Many scholars believe that because of the aforementioned double monopoly of land
ownership, the increasing problem of housing affordability is inevitable in a free market
until a time comes when this is no longer sustainable and a great correction needs to
occur.

According to several studies relating to the British housing market (Yoshiharu Y., 1999;
Burnett J., 1986; Saunders P.,1990), which may be imported, advertently, to explain the
Maltese scenario, as the bourgeoise class expanded, the idea of homeownership became
more popular. In Malta, this was encouraged further by the provision of subsidised
mortgage interest rates and subsidies, together with the granting of tracts of land by
Government to private individuals. Building societies, with particular reference to
Lohombus Bank in Malta, buttressed bourgeoise purchasing power even further.

“[T]he development of home ownership goes hand in hand with stagnation or even decline of the
rental housing. As the capital asset market grows, land (or property) is also integrated into the asset
market. People come to prefer owning to renting, because not just using land but owning it has a
special meaning. If rents continue to remain stable, people may want to remain as renters. However,
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the rise in land prices results in rent rises.”

11 Yoshiharu Y. (1999) Affordability Crises in Housing in Britain and Japan: The Journal of Housing
Studies Volume 14 p. 101.
12 Ibid. pp. 104 - 105.

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