In Numbers: PN MP Breaks Down How Tough It Is For Youths To Buy Property Despite New €10,000 Aid
After the government launched a scheme that will see first-time buyers receive a €10,000 grant over a decade, Shadow Finance Minister Jerome Caruana Cilia warned that the aid doesn’t go far enough to address the problem of sky-high property prices.
Caruana Cilia noted that a 2021 study by KPMG estimated the price of a median apartment €249,000, which means that a single person must save €25,000 simpley to afford a deposit.
“It is such a serious challenge that the government launched a scheme for people who are eligible for the loan but can’t afford the 10% down payment,” he said.
The scheme, which sees banks loan eligible homeowners the deposit and the Housing Authority pay off the interest, is set to be extended in scope – covering properties worth up to €225,000, up from the current €175,000.
“It’s a good decision but still not enough as it’s still €25,000 less than the average property price as of 2021,” Caruana Cilia noted.
Using a bank home loan calculator for a hypothetical 30-year-old on an average annual gross salary of €24,000, the MP noted that he would only be entitled to a loan of €170,385, way below the average cost of an apartment.
“Despite the government’s measures, it will be practically impossible to acquire a loan,” he warned.
Taking the example further, he said that if the youth somehow manages to save up enough money for the deposit of an average deposit and obtains a €225,000 loan, his quality of living will take a huge hit.
“He will start with €1,527 in hand (post tax) per month and must pay €880.36 for the home loan every month for 34 years, and the rate could rise further if banks raise interest rates. This means that for 34 years, he will only have €647 left over every month, or €7,764 per year or €21 per day.”
However, a recent study commissioned by the General Workers Union, Moviment Graffitti and the Anti-Poverty Alliance estimated that a single person needs around €14,800 a year, excluding mortgage payments, to live a decent life.
“In other words, if a single person wants to take out a home loan to buy a small apartment and spend the rest of their lives repaying it, it will be impossible for them to live a decent life. And this is for a single person, let alone a parent,” Caruana Cilia said.
“The lack of government planning means that you must crucify yourself to buy a small apartment, if you even manage to do that. This is the reality after 10 years of a PL government. Property prices have exploded thanks to politics that aren’t based on the common good but on a few people getting richer with the rest feeding off whatever crumbs remain.”
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