Editorial | Greed causes indigestion

Greed causes indigestion and the same applies in the economy. The quick-buck mentality is not conducive to a healthy economy and is partly to blame for the runaway prices in the rental market

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The signals have long been felt but now the slowdown in the property market has been confirmed by a study released yesterday by KPMG.

Operators believe this is the result of the market regaining balance after six years of explosive growth.

And it may not be a bad thing that the industry is plateauing because it helps the sector find its feet and focus on quality rather than quantity.

Quality appears to have been a victim during the growth period, with some operators even expressing their fear of Malta gaining a reputation as a destination for working-class migrants and tourists.

This fear is stoked by the shoddy construction and finishing work in some high-end properties that fall short of the expectations of rich buyers. God only knows what the quality of work in less prominent and ordinary apartment blocks is.

Cutting corners to cut costs is a national trait but has now been exposed bare by the KPMG study in a sector where shoddiness can be unforgiving.

It is no wonder that the Prime Minister yesterday warned operators in the sector against greed.

Greed causes indigestion and the same applies in the economy. The quick-buck mentality is not conducive to a healthy economy and is partly to blame for the runaway prices in the rental market.

The KPMG study found that there were very few available properties for rent below the €1,000 per month mark. It is hard to believe that the shortage is a result of fewer properties within that range that are on the market.

The truth is that prices have been inflated to a point that they are not only harming those Maltese who depend on the rental market for their housing needs, but also industries that rely on foreigners.

A representative of the gaming sector, last week warned that higher rents were creating wage pressures and could pose a threat to the industry’s competitiveness.

Within this context, the relevance of an organisation like the Malta Developers Association cannot be understated.

The MDA provides a single interlocutor for the industry; from excavation contractors to developers to property agents.

It is an important lobby group but more importantly, could serve as a driving force to up industry standards in a sector notorious for cutting corners. The MDA can also serve to educate its members on the need for prudence.

But while self-regulation is important, standards should be set at law and enforced.

This is why the government must speed up the process to set up a building regulation authority that will serve to stamp out abuse and act as a focal point for the sector.

Professionalising the sector will help weed out the amateurs.

The rent reform law must also be enacted to bring some order to the property market and ensure the government collects its fair share of taxes from the large volume of income it generates.

The property and construction market remains an important cog for the economy, providing thousands of jobs to a wide range of individuals with different skill sets. It cannot and must not be written off.

But the property and construction industry must not be allowed to gain dominance in the economy and to do this, other sectors, such as manufacturing, must also grow through new investment.

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