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After several years of optimism, builders are becoming pessimistic for the first time, expecting a drop in orders for apartments

2022-08-09 08:42:21Biznes SHKRUAR NGA REDAKSIA VOX

After several years of optimism, builders are becoming pessimistic for the first

In contrast to the performance of the economy, both during the pandemic period and high inflation, the construction sector has shown an unusual growth.

During 2020, when it was the peak of the pandemic, construction and real estate led the economy, making the decline from the shutdown only -3.5% from the -8% expected by international institutions. The construction sector itself in 2020 grows by almost 2% and that of real estate by 5.7, the highest of all other sectors of the economy.

The trend continued in 2021, at a faster rate than the revival of the economy after the pandemic. Construction grew by nearly 20% in 2021 (up from 8.5% as the entire economy expanded) and real estate by nearly 9%. Even in the first quarter of this year, construction saw an increase of 25.5%, from about 6% for the entire economy.

Even in the first part of 2022, despite the fact that high inflation, which has currently reached 7.5%, (the highest in 20 years) harmed consumption, builders still appeared optimistic in the confidence surveys of the Bank of Albania.

However, their optimism has turned into pessimism for the first time in July. According to the Bank of Albania, in July the indicator of confidence in construction (TBN) recorded a decrease of 1.9 percentage points compared to a month ago. "This development was influenced both by the deterioration of the balance for the construction activity, as well as by the indicator for ordering contracts. "Expectations for employment, but also those for prices, registered a decrease, after the significant increase of the previous month", assesses the Bank of Albania.

In recent months, construction costs are increasing rapidly due to the increase in the cost of construction materials, but also the lack of labor, as a result of emigration.

According to INTSAT, for the first 6 months, imports in value of cast iron and steel increased by 40% (+8.6 billion ALL), although in quantity they decreased by 5.8%.

Aluminum was also imported 60% more in value (+3.5 billion ALL), for almost the same amount as the same period a year ago. This cost is expected to be transferred to apartment prices, while public works builders were assured that the additional cost will be borne by the budget (taxpayer), as they will be subsidized for increased costs.

Apartment prices have risen rapidly in recent years. According to the Bank of Albania, the Fischer House Price Index in 2021 increased by 9% compared to the previous year. Annual housing price growth was slower, compared to 11.3% in 2020. Compared to 2013, real estate prices nationwide have increased by almost 58%.

The increase in prices so far has not prevented the increase in supply. Construction does not intend to stop at least in the medium term.

While the year 2021 marked the record of the area of ​​construction permits issued in the capital, since the 90s, the year 2022 should bring another record, signaling further concrete in the already overburdened Tirana.

INSTAT reported that the area of ​​construction permits granted in the capital was 800,000 square meters, doubling compared to the same period a year ago. The area of ​​permits granted in the capital only in the first quarter of this year is half of that granted for the entire year 2021.

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