With apartment prices that have almost doubled in a decade and wages that have grown at much lower rates (indexed to inflation) the average Albanian today has to work about 2 and a half decades longer to buy an apartment in Tirana. 

"Monitor" has calculated how many more years of work are needed to buy an apartment with an area of ??90 square meters, assuming that 70% of the individual's income with an average monthly salary goes to cover daily expenses and the remaining part to repayment of loan installments (when you get a loan from the bank, the latter requires that a maximum of 30% of the income goes to pay off the loan installment). 

From the calculations, which take into account inflation, interest on loans and the time value of money, it results that an average wage earner has to work 24 years more to buy a 90 m2 apartment, compared to the time it took him seven years earlier. first (2015). 

Deterioration in purchasing power over a seven-year period (2015-2022) is closely related to much lower income growth or decline in real terms and an increase in the amount that must be borrowed due to significant appreciation of apartment prices . 

According to the Property Index recently published by Keydata Albania, a unit of "Çelësi Media Group", it results that the average price of an apartment in Tirana is 1,214 euros/m2 at the end of the 9th month of 2022, from 870 euros/m2, which was in 2015, becoming more expensive by about 40%. Ylli Sula, CEO of "Çelësi media Group" claims that the average price includes both new and old apartments, while the average of new apartments is even higher, since new constructions have become more expensive. 

The Bank of Albania, which publishes the Fisher index, which measures the progress of new housing, announced that at the end of the first 6 months of 2022, apartment prices had increased by 39%, compared to just a year ago. 

Unlike the apartments that have "flown", real wages have grown much more slowly. According to INSTAT, at the end of the first 6 months, the average salary in nominal value was about 60.6 thousand ALL, from 45.6 thousand ALL at the beginning of 2014, with an increase of 32%. While indexed to inflation (which actually measures purchasing power by taking into account price appreciation over the same period), the real wage has increased by about 20%. 

How much did it cost in Tirana to buy a 90 m2 apartment over the years? 

An apartment with an area of ??90 m2 today costs "a tyrant" an average of 12.7 million lek, without including any associated costs such as furniture, property insurance or real estate taxes, etc. An average wage earner would have to work 64 years today to buy a house (assuming 30% of income goes to getting a loan and 70%). 

While for the same apartment over the years the individual paid much less. In 2015, an entry cost an average of 6.4 million ALL and with the average salary of that period, he would need 40 years of work. (see chart: How many years does it take on average to buy an apartment?) 

The above calculation is based on the disposable income of a family indexed with the inflation rate, the average price of a square meter in Tirana, the time value of money as well as the average annual interest rates of loans according to the Bank of Albania. 

The difference deepens to 25 years more for the area inside the "Small Ring", while the only slightly favorable area for citizens seems to remain the one outside the "Ring". 

The increase in mortgage interest rates is expected to have a negative effect on the ability to pay for the loan. In the last four months, the loan in the local currency for individuals to buy a house has become significantly more expensive. According to the Bank of Albania in October, the average interest rate reached 4.87%, from 3.48% in the same month of the previous year. 

This is the highest level since December 2015. The tightening of loan interests reflects the monetary tightening policy that the Bank of Albania has been following since March of this year, as a means to fight high inflation. The base interest rate has increased from 0.5% to 2.75% over seven months. The increase in the base rate by the Bank of Albania increases the price of injecting money into the system, making money more expensive (see chart: Development of loan interests). 

According to Numbeo, a square meter in the center of Tirana costs on average 2100 euros, while in the capital of Greece, Athens, it costs 2400 euros. The difference between the two centers translates to only 16%. If we refer to the average salaries, again according to Numbeo, a citizen in Athens is paid around 900 euros, while a salary earner in Tirana is paid half of this value.

So regardless of the fact that in terms of wages, an Albanian citizen is paid ½ of a Greek citizen, when buying an apartment in the center of Athens, the latter pays only 350 euros more per square meter, thus reducing the time it takes to own an apartment. . 

Not to go too far, but according to the above site, an apartment in the center of Pristina costs 40% less than an apartment in the center of Tirana, although the average salaries for both places do not have a significant difference in value. buying an apartment in Albania is closely related to the much lower increase in income in relation to the prices of the latter. 

(Source: Monitor)