Apartment prices in Albania for the third quarter of 2022 have increased about 2.5 times more than the prices of apartments in the eurozone and EU countries.

According to data from the Bank of Albania, the apartment price index in the third quarter was 17.6% more compared to the same period in 2021. Housing prices during 2022 have increased at a rate three times higher than the average.  historical.

The growth is fast not only in relation to previous periods, but also to other countries.  In the eurozone states, according to EUROSTAT data, apartment prices, measured by the Housing Price Index, in the third quarter of 2022, increased by 6.8% and by 7.4% in the EU compared to the same period  3 months of the previous year.  The increase in prices in Albania compared to the changes in the eurozone countries and EU countries is 2.5 times higher.

Eurostat data show that the trend of housing prices in the European Union presents large differences between different countries, but only three member countries have an increase in house prices higher than Albania.  The highest growth rate is recorded in Estonia, with 24.2%, followed by Hungary, with 21%, Lithuania with 19.3%.  All other EU member states have a lower growth rate, starting from the Czech Republic with 16.6%, to Sweden, with only 1.1%.  Meanwhile, Denmark is the only country in the EU where house prices are falling, by 2.4%.

In some countries, the development of housing prices is also affected by very high inflation.  For example, in Turkey (one of the non-EU countries that Eurostat reports statistics on) the annual growth of housing prices reached 189% in quarter III 2022. This growth seems more related to the very high level of inflation (  which reached a record of 85.5% in October 2022), than with the dynamics of the property market itself.

If we look at the trends in price changes over the past year, we notice that the average growth rate in the EU is slowing down significantly.  In the first quarter the increase was 10.4%, in the second quarter it decreased to 9.8%, while in the third quarter the decrease was even more obvious, to 7.4%.  The slowdown in price growth seems to be a logical consequence of the increase in inflation and interest rates, which has made bank loans more expensive and negatively affected demand.

For Albania, this trend is completely opposite.  According to the Bank of Albania, in the first quarter of 2022 the annual change of the index was 10.9%, in the second quarter the increase reached 15.3%, while in the third it increased further to 17.6%.

For 2022, property prices within the yellow construction line in the capital were sold at a price above 1,000 euros per square meter according to real estate agencies.  The builders claimed that the high level came from the high cost of building materials and high demand.

But the possible approval of the fiscal amnesty law is expected to further increase the demand for expensive properties.  Market experts say that in this situation, builders will not hesitate to raise prices for this year as well.

"The implementation of the fiscal amnesty would bring an increase in demand and prices.  If the amnesty is approved in 2023, those who have informal money will rush to invest it in construction.  For this reason, prices will remain at high levels.  Otherwise, the construction bubble will deflate and property prices will fall, as that part of the buyers who pay in cash will be withdrawn", Ylli Sula, the head of the Keydata index, says to Monitor Ylli Sula.

Ionian Antoni, CEO of the real estate company "Century 21 Albania" predicts price stagnation for 2023, as the high prices of apartments the previous year affected the drop in demand.

"I think that the Albanian real estate market and especially Tirana will not see a reduction in prices.  Maybe there will be a slowdown in demand, maybe a reflection of prices, and especially a positioning of them not rising for several years, but I don't believe that there will be any drop in property prices in Albania".

According to an observation by Monitor in the month of September 2022, apartment prices had increased by about 40% more than in 2021. The strongest price increase was in areas such as: former Block, where the maximum price from 3,500 euros reached 5,000 euros per meter  square, Paris Municipality where apartments from 1,700 euros reached 2,200 euros per square meter.  While the prices of the apartments in the tower near Sahat and Rainbow Center in the former Block were sold for 5,000 euros per square meter.

After the pandemic, real estate prices in Albania have increased at a very fast pace.  Among the main factors, experts list the rapid economic recovery after the pandemic, the low interest rates and the high supply of bank credit, the growing demand from foreign buyers or non-resident Albanians, but to a large extent also the laundering of money originating from  illegal activities.

(Source: Monitor)