Builders have reported a decrease in current orders in the relevant sector, according to the latest survey of economic activity of businesses and consumers Bank of Albania, which refers to August. 

The balance of answers to questions related to current orders was negative by -35 percentage points, the lowest since June. This balance, which measures the percentage of negative responses by subtracting the percentages of positive responses, indicates that most builders report a decline in orders in the sector. 

Despite declining orders, which means a contraction in demand, forecasts for price increases continue to be positive, even at higher rates than in previous months. The balance of answers to the question regarding the price performance over the next three months was positive, at 18.5 percentage points, the highest since May 2016, when data from the Bank of Albania are reported. 

Since March 2020, the balance of responses to prices over the next 3 months has been positive. This expectation has resulted in line with what has really happened with the real estate market, which in the last two years has marked a significant rise in prices. 

The average price of one square meter in the capital at the end of the first 6 months of 2021 reached 1102 euros / square meter, according to the index of "Keydata Albania", a publication by Çelësi Media Group. Prices range from about 700-800 euro / m2 in the suburbs to 4 thousand euro / m2 in the towers in the city center. 

According to the Bank of Albania, the Fischer House Price Index increased by 0.7% compared to the previous 6 months and by 6.7% compared to a year ago. In the second half of 2020, house prices increased by 6.2% compared to the previous six months and by 11.3% on an annual basis. Compared to the base survey period, 2013, house prices in Albania have increased by 49.4%. 

The upward trend in house prices has continued for the largest property market in the country, that of Tirana. Housing prices in the capital increased by 3.4% compared to the second half of 2020 and by 5.8% compared to the first half of last year. 

Bank of Albania data show that despite the declining expectation of orders, capacity utilization rates reached 71.2% in the third quarter of the year, which is the highest record level ever recorded, since 2016, when this indicator was recorded. 

Based on the area given for the building permit, the momentum is expected to continue. According to INSTAT, the number of construction permits and the new area marked a significant increase in the first 6 months of the year 71% of the new area will be built in Tirana. The municipality of the capital gave permission for the construction of 816,097 square meters with an increase of 59% compared to 2020 and 4.2% less compared to 2019 when the area of ​​permits reached the highest level in a decade. 

In contrast to this wave of construction, solvency, at least officially, remains low. In the Bank of Albania survey with consumers, the balance of answers to the question “Do you plan to buy or build a house in the next 12 months (to live on your own, a family member, as a vacation home, to give rent, etc. ”is negative of -86 percentage points, showing the financial inability of consumers to buy an apartment, while prices are only rising.

(Source: Monitor)