TIRANA, June 19- Bank of Albania data show that home loans increased by 11 percent compared to the previous year. At the end of March, the stock of household loans was 57.5 billion lek (473.1 million euros), while the loan stock of euro-denominated housing loans was 53.8 billion lek (442.7 million euros). Euro denominated loans declined due to the depreciation of the currency, but also as a consequence of the de-euroization policy pursued by the Bank of Albania to reduce the use of the common currency in the economy.
Klajdi Memajdini from DevInf real estate agency said that 70 to 80 percent of sales mediated through his agency are financed through credit. According to credit officers working in commercial banks, home purchase loans have low risk and are rarely classified as bad loans because individuals strive at all costs to keep up with banks to avoid losing their homes.
The periphery is required by low-income individuals who are favored by soft loans. By the end of 2018, 1104 heads of households were soft loan beneficiaries who benefited from fixed-rate home loans of 3 percent, while the rest were subsidized by the Municipality of Tirana. The total amount of soft loan for the winners of 2018 is 5.9 billion lek (48.5 million euros). 359 of them have applied for a condominium, more than half for a 1+1 home, and 194 for a 2+1 home.
Market sources claim that the majority of individuals who are soft loan beneficiaries have low income of no more than 75-80 thousand lek (617-658 euros) a month, that generally have no savings other than credit. Generally, they supplied the demand for purchase on the suburbs, in the Yzberisht or Fresku area, where according to credit officers the house prices have increased.
The Bank of Albania reported that housing prices increased by 15.2 percent over the period 2013-2018. The index is calculated on the basis of information reported by construction companies and agents operating in the real estate market. Direct and indirect indicators of activity in the real estate market say the supply and demand have generally shown an increase over the period. The bank clarifies that in the real estate market demand generally reflects demographic developments, revenue performance and financing conditions for acquisition or development of real estate, while the offer is related to the number of construction permits.
From the point of view of demand, the banking sector data for the period show a slight decline in real estate purchase credit surplus during the first half of 2018, but higher than in the previous year. The interest rates on real estate loans grew slightly during the second half of the year. Respondents report that about 54 percent of residential and commercial properties sold by them were purchased by bank lending. And as demand for real estate loans has increased, the terms of approval for this type of loan and borrowers category have continued to ease.
The construction loan surplus has increased by 8.7 percent compared to the end of the first half. Construction loans account for 15 percent of credit outstanding for businesses and this share has increased, but remains below the level of around 20 percent recorded over the 2007-2011 timeframe. The quality of real estate credit has improved and the ratio of non-performing loans dropped to 5.7 percent, from 6.8 percent in June 2018.
