In recent weeks two narratives have emerged side by side in the public debate. An analysis by the Central Bank of Malta indicates that, at aggregate level, housing has become more, not less, affordable, largely reflecting sustained growth in disposable income. Yet figures drawn from the same institution show that the median value of home loans contracted by young borrowers has increased sharply in a very short span of time.Both statements can be true.Average affordability may improve while a growing share of households nevertheless finds itself under mounting pressure when attempting to access adequate housing. It is precisely within this space that the Foundation for Affordable Housing identifies what it terms the stretched class: individuals and families who are active in the labour market and earn too much to qualify for social housing, yet too little to secure housing that meets their needs without assuming an unsustainable financial burden.The Foundation for Affordable Housing defines the “stretched class” as households roughly between the second and fifth income deciles, earning about €11,500 to €36,000 per year.Under prevailing lending conditions, this group can theoretically access properties within a certain price range, yet when applying the widely used benchmark that housing should not exceed three times annual income, what is realistically affordable falls far lower.With average apartment prices now surpassing €300,000, many in this bracket are being priced out, especially once deposits and the substantial costs required to finish shell properties are taken into account.Who is building for these households?The Foundation for Affordable Housing was established precisely to provide homes at below-market prices for this segment, through a model widely used across Europe in which the third sector, non-governmental yet not-for-profit, plays an active role in housing provision.For years, Malta’s non-private-sector interventions in the housing market have been almost exclusively in the hands of government and largely restricted to the most vulnerable. The Foundation’s approach therefore challenges two widely held assumptions: first, that investment in affordable housing must be limited to the public sector, and second, that such investment should apply only to those in deepest need.Yet this shift is not as radical as it may appear.Until the late 1990s, the Housing Authority itself regularly transferred plots, and later completed units, to young households, using the revenue generated to recycle funds into further construction.The rupture in policy came in the early 2000s, when public investment in housing began to be progressively narrowed and targeted, a process often described as the “residualisation” of social housing. The target of limited housing provision effectively became (very) low-income vulnerable individuals.By the early 2010s, government had effectively stopped building new units, increasingly relying instead on the private market to deliver homes.This contraction in public housing provision left the system increasingly vulnerable to sudden pressures. When demographic growth drove demand sharply upward, the resulting imbalance directly translated into steep increases in property prices.It was a new phenomenon that affordability challenges did not remain exclusively attached to low-income households, but started to climb into new categories of the working population. Meanwhile, Malta lacked affordable housing precisely at the moment it was most needed.The State rightly responded by deploying grants and subsidies to help households meet market rents and purchase prices, reflecting a demand-side policy approach.Yet the tradition of direct supply of affordable homes — hence the supply-side approach — into the market had been lost, even as in other European jurisdictions this was being strengthened through the participation of the private sector, particularly that working at a limited profit.The Affordable Homes Initiative launched by the Foundation is its first attempt at addressing this affordability shortfall by delivering around 260 affordable units into the market.Homes are expected to be priced at roughly 30 per cent below market value.Serving this above-mentioned category of households through socially-oriented yet financially sustainable third-sector housing providers ensures that middle-income households are effectively empowered to participate in the economy and the housing sector.It enables the Foundation to remain financially sustainable and reinvest in further affordable supply.In this context, criticism that affordable housing initiatives should be undertaken solely by government, or that middle-income households should not be targeted by housing policy, risks overlooking the very dynamics that contributed to today’s shortage of affordable homes.The Affordable Homes Initiative is currently at the evaluation stage, while thousands of prospective clients have already registered their interest with the Foundation for Affordable Housing.As Malta continues its economic transition, there arises a need for housing solutions.Jake Azzopardi is the CEO Foundation for Affordable Housing.Lovin Malta is open to interesting, compelling guest posts from third parties. 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