Maltese economics professor Philip von Brockdorff said that Europe should seriously embrace public-private partnership models for housing, warning that home affordability concerns have contributed to the recent wave of protests and riots across the continent.
Prof. von Brockdorff tells WhosWho.mt that Europe should abandon the concept that housing prices should be dictated exclusively by market forces.
“We can’t keep exclusively depending on the private sector without any form of involvement by the public sector,” he said.
“For example, the private sector could finance the construction of housing on state-owned land, with the units sold at prices below market value.”
Such a scheme was recently launched by the Maltese Government in collaboration with the Church,although the Malta Development Association warned it could constitute unlawful state aid to the operators selected to develop the projects.
Prof. von Brockdorff said that while the European Commission has promised to prioritise housing affordability, its vision doesn’t go far enough.
“Europe is focusing on boosting private housing stock alone in the hope that prices will start to fall, but they’re not falling,” he warned. “They’re not being brave enough, and it’s like they consider market intervention to be some sort of blasphemy.”
He said that these problems are being exacerbated by a continental decline in people inheriting properties from their parents.
“In the past, elderly parents would often leave their properties to their children, but nowadays many elderly people are forced to sell their homes to cover the cost of retirement care. As a result, the transfer of wealth between generations is becoming less common.”
“While the tradition of passing down property remains strong in Malta, this trend is already evident in countries such as the UK. These developments have been building up for years and are now coming to a head.”
Other European economic issues flagged by Prof. von Brockdorff include rising rent prices, partly driven by the proliferation of short-let apartments, as well as rising fuel prices, and financial strain as a result of funding Ukraine's war agaisnt Russia.
He also acknowledged Europe’s changing demographics, including ageing native populations, growing numbers of migrant workers and an increasing Muslim presence.
“This isn’t the same Europe of World War Two; it’s a completely different Europe.”
He went on to argue that the economic situation has been compounded by declining trade union membership and collective bargaining coverage across Europe, noting that many migrant workers who move to the continent don’t join trade unions.
“The structure of the labour market has changed. Employers can now offer zero-hour contracts, while fewer workers are joining trade unions, ultimately affecting their wages.
“When implemented effectively, collective agreements should actually stimulate economic growth by improving both productivity and workers’ compensation.”
