Tightened lending rules increases apartment rent prices

TIRANA, September 1ؔhe huge contrast between apartment prices in Tirana and the limited possibilities for people to purchase a home has greatly boosted the rent market in the Albanian capital. According to many real estate agencies the two main factors behind the revival of the rent market are the tightened lending conditions by banks toward the real estate market and the return of the academic season with students storming Tirana from all over Albania. Students seem to make up the majority of demand in the market with September as the peak of the rent season. Meanwhile, agencies don’t expect home prices to drop anytime soon, which should direct clients’ decision making toward renting rather than owning even though the surplus demand is sure to affect rent prices into going up.
According to the Bank of Albania (BoA) for the first half of 2009, the rent prices index (RPI) in Tirana increased by 7.5% on the year (5.9% without taking into consideration currency exchange fluctuations) during the second quarter of 2009. Compared to the first quarter of 2009, RPI in Q2-2009 decreased by 14.7%.
According to experts, the different trends between home prices and apartment rents have increased the price/rent ratio above its historical trend. However, rent prices might be much higher. The methodology of measuring RPI is based on the supposition that renters declare the real price of their transactions, but the market in general suffers from lack of transparency.
The number of rented apartments also recorded a 7.5% growth in the first 6 months of 2009.