Construction costs up 0.5% year-on-year in Q1

TIRANA, May 24 – Construction costs continue to increase despite the severe crisis that has manifested itself in this important sector of the Albanian economy since the second half of 2009. Latest Institute of Statistics data published this week show the construction cost index rose 0.5 percent year-on-year during the first quarter of 2011 but was up only 0.2 percent compared to the previous quarter. One year ago, the change was 0.1 percent. Compared to the final quarter of 2010, direct expenditure rose by 0.3 percent while material expenditure increased by 0.4 percent. Construction and electrical material prices rose by 0.4 and 0.5 percent respectively, compared to the previous quarter. Transport expenditure also rose by 0.1 percent, reported INSTAT. Year-on-year data show the biggest increase was registered in the electrical materials group with 4.5 percent, followed by transport expenditure with 1.2 percent and construction materials which rose 0.9 percent. The Construction Cost Index calculates the difference of expenditure in construction, taking into consideration the change of basic input prices such as construction materials, construction vehicles and equipment, as well as expenses for employees. Latest INSTAT data show the construction and post-telecommunication sectors continued to suffer– registering negative growth rates in the final quarter of 2010. The construction sector, once the main driver of the Albanian economy, remains in crisis, shrinking by 14.8 percent year-on-year and 3.7 percent compared to the third quarter of 2010. It was the hardest-hit during the first nine months of 2010, shrinking by 20 percent in the first quarter, 29 percent in the second quarter and 22 percent in the third quarter. Reports show citizens are becoming more reluctant to buy new apartments due to falling revenues and especially a sharp decrease in immigrant remittances.