House prices have dropped by 20.6 percent compared to 2010 while rental prices are down by 16.2 percent, says the central bank
TIRANA, May 13 – House and rental prices have suffered a considerable decline during the past four years after the collapse of the remittances-fuelled construction boom in the pre-crisis years.
House prices have dropped by 20.6 percent compared to 2010 while rental prices are down by 16.2 percent, says the central bank in its monetary policy report for the first quarter of this year.
The house market has been characterized by a recovery in both consumer demand and supply. Despite increasing demand in the construction sector and the gradual reduction of stock, construction companies have been careful with costs which has partly been reflected on the final decrease of house prices measured by the house price index for Tirana.
“Excluding the final quarter of 2013, house prices have been on a downward trend in the past couple of years, reflecting the sluggish demand and presence of unsold inventory,” says the central bank.
Surveys show citizens are becoming more reluctant to buy new apartments because of falling revenues and especially a sharp decrease in migrant remittances. Tighter lending standards as bad loans have reached a record 25 percent have also influenced.
Apartments prices in Tirana vary from 700 to 2,500 euros/m2 in downtown Tirana compared to 400-650 euros/m2 in uptown areas of new ring road and Fresku. Thousands of apartments also remain unsold, especially in the cities of Durres and Vlora which have seen a boom in construction, says the Association of Construction.
The low number of construction permits issued by local government units is another reason for the crisis in the long-ailing construction sector which has been in crisis since the onset of the global crisis in 2008.
The lift of the construction ban last January and the continuation of the payment of government arrears is expected to give a new boost to construction in 2015.
The lift of the ban has enabled the resumption of construction permits for individual houses, public buildings, infrastructure and emergency interventions, as well as buildings serving the economic development, tourism, agriculture and farming
