Builders and managers of real estate agencies predict that apartment prices in 2023 will continue to remain at high levels.

In 2022, property prices within the yellow construction line were sold for over 1,000 euros per square meter.  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.

The builder Hajredin Fratari underlines that for the expensive apartments with prices over 2,000 euros/m², the demand is expected to decrease, due to the financial inability of many builders to continue the works, which is expected to bring a change in prices.

Mr. Fratari adds that last year, many new construction sites were opened in Tirana in difficulty for the continuation of the works.

A builder asked by "Monitor", who asked to remain anonymous, said that in order to continue the works in 2022, entrepreneurs of the sector received a lot of money with usury, through returns with a high percentage of interest.

But Ylli Sula, the head of the "Keydata" index, emphasizes that the possible approval of the Fiscal Amnesty will be the main source for construction development in 2023.

"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 withdraw".

In a meeting held for years with diaspora entrepreneurs, Prime Minister Edi Rama announced the approval of the Fiscal Amnesty law.  The initiative first introduced in 2020 was criticized by international institutions, as it created spaces for the penetration of informal money.

In June 2022, the government presented to the public consultations the revised draft law on Fiscal and Criminal Amnesty for entities that make a voluntary declaration of assets worth 2 million euros, against a tax of 7 to 10%.

It is learned from the Ministry of Finance and Economy that the new consultations from the interest groups have been forwarded for the amnesty draft, which will be reflected in the relation of the draft law.

On the other hand, even in 2023, property with an economic price will be the one with a value of 1,000 euros per square meter.  Builder Hajredin Fratari says that the demand for these properties in 2023 will be high.

"In Tirana there are about 25,000 new families looking to buy an apartment through bank lending.  It is about families where both spouses are employed with an income of 2,000 to 3,000 euros per month and can afford the bank loan.

For these categories, the demand will continue to be high, which will not favor the drop in prices".  Mr. Fratari recommends that for these families, it is necessary for the second level banks to credit them in the value of 100% of the amount of the apartment, since they have the buyer's mortgage guarantee.

Jonian Antoni, CEO of the real estate company "Century 21 Albania", predicts price stagnation in 2023, since the high prices of apartments in 2022 affected the drop in demand.

"I think that the Albanian property market, and especially Tirana, will not have a price reduction.  Maybe the demand will be restrained, maybe there will be a reflection of the 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.

The reasons for the increase in prices in 2020, 2021, 2022 have been many, among the most important can be mentioned:

1) increasing demand for better quality properties (apartments).

2) the increase in the cost of construction due to global inflation

3) the increase in the standard of living experienced by Tirana, the coastal areas and some large cities in the last 10-15 years.

In 2023, we do not expect any new reasons for price increases.  In my judgment as an expert in the field, we do not even expect prices to fall.  Tirana, as a developing city, still has high margins of improvement for prices, because despite the perception, prices are very low compared to other capitals.

As a result, even if the demand is restrained, we do not expect a significant price drop, the worst that can happen is a temporary drop of 5-10%, which more than that, I would consider as a reflection and positioning in the country of  right, because most property prices today are positioned about 10% more expensive due to inflation".

Due to the increase in the interest rate, Ionian Antoni predicts that in the years 2023-2024 there will be less demand for apartments from young families, while the demand for buyers of luxury properties will not decrease.  In 2023, there will be less demand for second properties as well.

"The developed countries of the world have increased the reference bank interest rate.  As a result, the home loan has increased from 2-3% in the last three years, to 4-5% bank interest.  This has increased the loan installment by 20-30% on average and as a result, if an average installment in Tirana was 400-500 euros per month, from next year and for several years to come it will be 500-650 euros in  month.

Technically, 60% of buyers and especially young families buy on credit.  The increase in the installment makes the purchase of the apartment more unaffordable.  The amount of the loan installment is in constant competition with the rental prices.  The increase in installments makes it less competitive with rent.  For this reason, many young families may not buy.

Equally affected are second properties, or as we categorize properties on the coast.  The increase in interest rates and inflation means that fewer foreigners buy second property.

Since the diaspora and foreigners are the main buyers on the coast, it is expected that the demand for second properties will also slow down in 2023. The least affected category in these cases are luxury properties and buyers as investors.  The latter hunt the moments of reflection to try to invest and negotiate better".

(Source: Monitor)