Malta’s property market has seen rapid price growth in recent years, but officials argue that affordability has not deteriorated commensurately. The Central Bank of Malta (CBM) analysis indicates that prices remain roughly in line with fundamentals and are even undervalued relative to incomes. Governor Alexander Demarco has noted that Maltese home prices rose about 75% over the past decade or roughly 5-6% per year. Yet the CBM’s house price misalignment index finds that prices are “below their fundamental levels” reflecting strong economic growth and migration demand balanced by rising construction and general costs. Demarco reports that for the past three to four years, Malta’s prices were about 5% below the long-run norm and that current trends show no speculative bubble. Indeed, he observes that Malta’s house-price‐to‐income ratio has fallen steadily since 2016, reaching a level near that of 2005 in 2024 despite nominal prices being much higher. In short, while prices have climbed, incomes and wages have risen faster, keeping affordability roughly stable.
Affordability in Malta is also argued to be reflected in very high home‐ownership rates. For example, among Maltese households in which all members are under 35, approximately 91% owned or co-owned their home in 2023, up from approximately 81% in 2014. The Central Bank’s Household Finance survey confirms that, even in the lower-income quintiles, home ownership remains above 60%. This may reflect cultural norms, such as a strong preference for ownership, as well as policy support, such as favourable lending, grants, and tax rules. Malta has implemented several schemes to support first-time buyers, such as the notional equity method, and has allocated free government land to contractors such as Malita to build affordable units. In 2024, Malita secured a €22 million agreement with the European Investment Bank to expand social housing.
By contrast, larger markets in the EU, such as France and Germany, show different housing and affordability patterns. Malta’s homeownership rate vastly exceeds both France’s of approximately 61% and Germany’s of approximately 47%. Notably, Germany is unique in Europe for its majority-rental model, with 53% of Germans renting. Across the EU, residential property has become much less affordable since 2010. From 2010 to 2025, average sales prices in the EU jumped approximately 55%, and rents approximately 27%, far outpacing the 20% growth in incomes. While in Malta, housing remains more affordable than the EU average, markets such as Sweden, the Netherlands, and Ireland have price-to-income ratios well above 120. Thus, governments are responding on multiple fronts to try to sweeten the pill of buying or renting.
France faces tight markets, especially in big cities. The share of social and public housing in France is among the highest in Europe, accounting for approximately 17% of all dwellings, owing to an extensive public housing sector and longstanding subsidies. France has implemented income-based aids and interest-free loans for first-time buyers in high-demand areas, alongside tax breaks for rental investment and purchases. Rents in tight zones are partially regulated through a rent-cap mechanism. Yet despite extensive social housing and subsidies, including rental and homebuyer assistance, urban rents continue to rise faster than incomes in many areas. In 2024, France’s price-to-income ratio of 107 indicates modest pressure. Critics note that steadily rising construction costs, long planning delays, and recent cuts in some subsidies continue to strain affordability in France.
Germany’s recent price boom has begun to strain households despite stringent rent laws, pushing more young people towards renting or co-living. As a predominantly renter nation, Germany has strong tenant protections and rent controls in place, which have historically kept living costs in check. Nationwide, the federal government has promised new tax incentives to spur construction of rental housing from 2024. However, challenges remain, as cities like Berlin, experimented with strict rent caps, though courts nullified the local law, highlighting legal limits of top-down controls. Germany generally follows a policy that combines social housing investment with welfare support for low-income tenants, rather than the homeowner-focused tools seen in Malta. A previous “Baukindergeld” subsidy for families with children to boost homebuying was allowed to lapse in 2021, and no direct equivalent has been reintroduced.
Overall, affordability pressures are broad in Europe. The contrast with France and Germany illustrates how different institutional legacies, including rental norms and welfare systems, shape both housing outcomes and the tools chosen to address them. Despite divergent approaches, the persistent challenge of demand driven by population growth, urbanisation, or tourism continues to outpace new construction. The current situation suggests that states must further subsidise new builds, as without such support, first-time buyers face difficulties maintaining social lives due to high rents, loan repayments, and rising living costs. As Europe debates an “Affordable Housing Plan” for 2026, it remains clear that no single solution fits all contexts. In Malta’s case, strong incomes and deeply entrenched homeownership have so far softened the impact of rising prices. However, policy must remain vigilant as lower incomes or higher interest rates would quickly render the market unaffordable.
Dr Lina Klesper is an international legal assistant at PKF Malta
