Labour’s new poor – Kevin Cassar

The average apartment in Malta costs €300,000. That’s the same as Holland.  But the average salary in Malta in 2022 was €21,156 but in Holland it is €51,500. It’s more than twice as hard to afford a roof over your head here – which is why so many young people simply cannot.

Between 2013 and 2022 house prices doubled.  The median young couple can just about afford a 115-square-metre apartment on a 35-year loan.  The average single person simply cannot afford a property in Labour’s Malta. And if they rent, it costs them 42% more than it did in 2013 when Labour came to power.

The average gross salary in 2013 was €16,022 and it is now €21,156. The sad reality is that despite Labour’s bluff of “the best of times” (L-Aqwa zmien), ironically reminiscent of Dickens’ Tale of Two Cities, those young people’s salaries have only increased by 32% but the price of property has increased by 100%

Labour’s policies have driven property prices to crisis levels, a debt-ridden crisis. A 2019 Financial Times report concluded that Malta’s golden visa programme contributed to soaring property prices. Malta’s low effective tax rate of 5%, the lowest in Europe, attracted many foreign companies but also significantly increased the population.  During Labour’s decade in power, the proportion of non-Maltese residents increased from 4.9% to 22.2%.  There are 115,449 non-Maltese residing in Malta – that’s one-fifth of the population. They contribute significantly to the economy but they’re also part of the reason that Malta’s young people are being priced out of the property market and why rental prices have sky-rocketed.

In a study of 200 cities, 90% were deemed unaffordable because the average home cost more than three times the average income.  In Malta, it costs more than 13 times the average income.

Those who buy their home will be burdened with a staggering monthly loan repayment. Those who cannot really afford to spend more than half their income on rent. That means less money for food, bills and other essentials.

Malta’s generous energy subsidies are what’s keeping many afloat. As the IMF pushes Malta to end those subsidies, many face the real prospect of having their homes repossessed.

Labour will resist pressures to cut subsidies.  It knows many are struggling and cutting that lifeline would tip them over the edge.  At a time of high inflation and rising mortgage costs, many would not be able to buffer that blow and Labour knows Robert Abela’s high approval ratings would quickly evaporate if the economic tide turns.

So Labour will continue to borrow to buy itself more time in power.  But rising interest rates have made government borrowing more costly. As government revenue falls, Labour will be constrained to cut spending.

Those cuts won’t come through rationing of political appointments, terminating double CEO salaries, cutting the FMS CEO’s inflated wage, or by cutting direct contracts for Labour’s funders.  Those cuts will come from public services.  Labour restricts funding, even for life-saving treatment, while it continues to lavish obscene and undeserved salaries and perks on total incompetents.

The only reason housing is not yet in crisis is that adult children continue to live with their parents.  The average age at which a Maltese adult leaves home is 29. In Sweden, it’s 19 and in Finland it’s 21.

The real prospect of homelessness is deferred through the generosity of parents who allow adult children, and their families, to share their property. That creates its own problems – overcrowding, familial conflicts, social issues such as reduced birth rates, delayed pregnancies, restricted family size, and increasing pressure on elderly parents to sell up and downsize.

Many young adults can only afford a deposit on a property because their own parents sacrificed theirs.

The need for social housing is bound to increase. Thousands are still waiting, years later, for social accommodation. As property prices become increasingly unaffordable, and as interest rates continue to rise, more young people will be priced out of the market. Marriage breakdowns and divorces will only make that problem worse.

But it’s not just the young that are affected.  The over-50s have seen the most significant increase in the proportion of low wages. At that age, no bank will extend a loan.  The combination of increasing property prices and the rising cost of living is creating the perfect storm – a slow strangulation of our society.

What is disturbingly odd is that the category of people most negatively affected by Labour’s policies is some of its staunchest supporters. Labour enjoys its highest ratings among the least educated, who are the lowest earners. They can only watch as the very rich purchase and rent property in their hometowns and villages, squeezing them out. While their parents could easily afford their own property, they can only dream of being able to do the same.

In 2013, the at-risk-of-poverty rate in Malta stood at 15.7%.  In 2021 it was at 20.3%.  That’s a staggering 105,471 people in Malta at risk of poverty under Labour.  In 2013 only 66,785 people in Malta were at risk of poverty.

Labour has managed to almost double that number.

Portugal has just scrapped its ‘golden visas’ to “fight against price speculation in real estate”. Ireland has done the same. So did Cyprus.

Portugal’s decision was driven by angst over a surge in house prices that left local residents struggling to find adequate accommodation. It is part of a package of measures designed to combat the housing crisis.

The Costa government has a plan to address housing affordability problems.  Abela’s government doesn’t, ignoring the plight of its citizens.

Labour is producing a generation of dependents who simply cannot cut themselves free of their umbilical cord. Those dependents are resentful of their parents’ luck. They had a simpler life but they also had everything they needed, including roofs over their heads.

Their offspring are compelled to live with their parents, possibly hoping they’ll die soon so they can finally have a place of their own.

This is Labour’s legacy: a new army of poor and homeless citizens.