Albania ranks third in Europe after Belarus and Russia for the most expensive apartment prices, in relation to purchasing power, according to Numbeo data for the period January-July 2022. 

Index for the affordability of buying an apartment, which is measured by the ratio of the average selling price of houses and the average disposable income of families, expressed as years of income, for Albania is 15.8. 

This means that an Albanian family needs about 16 years of income to buy an apartment. The index takes as a basis the net disposable income of a family, the average price of a square meter of the center and the suburbs, as well as the cost of a loan for 20 years. The lower this ratio is, the easier it is for families to buy a house. 

For Belarus, which is rated as the most expensive country for apartment prices, a family needs 17.4 years of income, while in Russia, which ranks second, a family needs 16.8 years. 

In relation to the countries of the region, Kosovo ranks as the cheapest country. The affordability index for buying an apartment in Kosovo is 11.7 years. Then comes North Macedonia 12.7 years, Montenegro with an index of 13.3 and Serbia with an index of 14.8. 

In the real estate price index for the period January-July 2021 according to Numbeo data, Albania ranked 7th with an index of 13.7 years. Among the countries of the region, Serbia was classified as the most expensive in 2021 with an index of 15.8 years. This country was classified second in Europe. Next was Montenegro with an index of 14.3 years, North Macedonia with 12.2 and Kosovo with 10.7 years. 

Many new construction sites have been opened in the capital this year. Compared to years, prices are higher in new buildings where construction has just started. In the suburbs of Tirana, such as Kinostudio or Astiri, the prices of new apartments have reached 1,000 to 1,100 euros per square meter from 900 to 1,000, which were the prices in these areas. The increase is 10% more. 

While in other areas the increase in prices is higher. In the Paris Commune area, the maximum price for new apartments was 1,700 euros per square meter (new construction being developed on the land of the former New York University). This year it reached 2,200 euros in the new building at the entrance of the commune of Paris. The price increase compared to years is 29.4%. 

While in the area of ??the Block and the towers in the center, the apartments are being sold for 5,000 euros per square meter. Last year, the prices of new constructions in the area of ??the former block started from 3,000 euros per square meter and the towers 4,000 euros per square meter. 

Arben Dervishi from the Builders' Association claimed for Monitor that the increase was influenced by the increase in the price of construction materials, especially iron, the increase in the wages of employees and the increase in the price of land. 

Apartment prices rise, real wages fall 

The deterioration of the purchasing power of an apartment is related to the much lower growth of incomes, or their decline in real terms (indexed for inflation) in relation to the increase in the price of houses. 

According to INSTAT data, at the end of the first quarter of 2022, the average salary in the country was 59 thousand ALL, with a decrease of 0.5% compared to the end of 2021 (when salaries increase due to bonuses) and 5.7% more more than the same period of the previous year. But, taking into account that inflation has exceeded the level of 7%, the real increase in wages is negative. 

From 2014 (the earliest period when INSTAT reports the data), the average nominal wage in the country according to INSTAT has increased by 25% until the end of 2021. Indexed with average annual inflation, the increase in wages in 7 years is only 12 %. 

While according to the Index of the Bank of Albania, apartment prices have increased by 60% for the same period. 

The real increase of wages by 12% and that of apartments by 60% in the last 7 years has significantly worsened the purchasing power of families living with normal income. The trend has worsened in 2022 due to high inflation and the continuation of the price increase of apartments, while the increase in wages in value is many times lower than the increase in house price in value. 

(Source: Monitor)