Impacts of Tourism Activities on Housing Affordability: A Case Study of Malta Island

This This study explores the impacts of tourism on housing affordability in Malta, a nation highly reliant on tourism as a pivotal economic sector. Utilizing a time-series dataset from 2005 to 2023, the research causal relationships between international tourist arrivals and key economic indicators such as the House Price Index (HPI), Consumer Price Index (CPI), and Real Gross Domestic Product (RGDP). Through robust statistical analyses, including the Augmented Dickey-Fuller (ADF) test and Granger causality tests, this paper identifies significant, dynamic relationships between the influx of tourists and the escalation of housing prices. The findings indicate a direct, proportional impact of increased tourist arrivals on housing market prices, suggesting that tourism not only enhances economic vitality but also significantly influences housing affordability. The results are supported by a high correlation between tourism and housing prices, alongside a notable correlation between tourism and other economic metrics. This study contributes to the understanding of the socio-economic impacts of tourism on small island economies, with implications for policymakers and stakeholders in the real estate and tourism sectors.