Rise in apartment prices does not seem to intend to stop. The expectations of entrepreneurs in the construction sector are that the rise in prices will continue in the coming months. 

In the Business Survey conducted regularly with enterprises by the Bank of Albania, construction entities were asked about their price expectations: 

How do you expect the prices you will set to change over the next 3 months? 

-1. They will grow 

-2. They will not change 

- 3. They will fall 

The balance of responses for April was 45, ie 45% more construction entities surveyed think that prices will increase, compared to those who think the opposite. Although slightly declining compared to the previous month (49.6), expectations for price increases continue to remain close to historical highs (see chart: How do you expect the prices you will set to change over the next 3 months?). 

Contacted by "Monitor", the builders give as the main reason for the expected increase in prices, the significant increase of raw materials. Arben Dervishi, secretary of the Builders Association said that “Construction costs have become more expensive due to rising prices of construction materials. The biggest increase has been for iron by 80 to 90% over the years. Costs for iron have increased by 30 to 40 euros per square meter of construction. There is also an increase in prices for other building materials, such as concrete, cement, aluminum doors and windows. There has also been a rise in prices for materials used for electrical installations. For some materials with copper composition the price increase goes even 2 to 3 times higher. 

The increase in costs has also been influenced by the increase in salaries for specialists and construction workers, not only due to the increase in the minimum wage, but also due to the high shortage of employees in this sector. Currently the construction sector is suffering from a significant shortage of workers and specialists. The phenomenon has deepened since the opening of the economy by the pandemic, where many workers work seasonally in Croatia, Italy and Germany. Currently a tile specialist requires payment 2 to 3 times more than before, while the daily payments of employees vary from 2,000 to 2,500 ALL from 1,500 ALL that they were. 

In this situation it is imperative that the state immediately update the construction price manual. It is also expected that an instruction on the recognition of the price of iron through initial purchase invoices will be drafted, due to the high increase in its price. 

Arben Dervishi from the builders' association says that the construction cost for the apartments in the suburbs has reached 600 euros / m2 from the previous 400 euros, due to the increase in the price of raw materials. 

"The cost of construction for facilities in peripheral areas from 400 euros has reached 600 euros / m2. To this cost in the sale prices are added the taxes of the municipality that occupy 11% of the sale value of the apartment, and of the owner of the land from 35 to 50% ", he affirms. 

According to him, the construction cost for the center apartments is higher, while for the construction of towers the cost increases even more from the high facades. 

“The towers erected in the center have been designed by foreign architects, where in addition to the quality of the works, much importance has been paid to the quality of the facade. Costs for tower facades range from 1,000 to 2,000 euros per square meter due to the height. The cost of profit for these constructions is not very high, as the investments extend for a very long time, there are towers that their construction lasts up to 10 years. Being a construction stretched over such a long time the costs are also higher while the profit rate is not very high but there are also undeclared costs. The cost for the facades of the apartments in the center reaches up to 500 euros per square meter. 

Earlier, the Bank of Albania announced that house prices have continued to increase in 2021. According to the Bank of Albania, the Fischer Index of house prices increased by 8.4% compared to the first half of the year and by 9% on an annual basis. . This change shows that, especially during the second half of 2021, the growth of housing prices in the country has accelerated significantly. However, referring to the periodic survey of the Bank of Albania, the annual growth of house prices was slower, compared to the level of 11.3% in 2020. 

According to other data from Keydata. A private index from the company Çelësi sh.pk with the support of the EBRD, the increase in real estate prices in the capital has continued in the first quarter of this year. 

In the first quarter of 2022, average prices are estimated at 1,143 Euro / m2, an increase of 3.2% compared to the end of last year. In the area inside the ring, prices are reaching an average of 1,300 Euro / m2. In the Block area, prices have exceeded 1,600 euros / m2. Even outside the Ring area, on average an apartment costs about 1 thousand euros / m2. 

(Source: Monitor)