INSURRECTION/ SP MPs rebel, drag Gjati to vote on territorial division!

 Kliko këtu për të tjera
Voxpress:

Rising housing prices and loans, Moody's warns Albania of the blow it could take

2026-09-20 17:39:49Biznes SHKRUAR NGA REDAKSIA VOX

Rising housing prices and loans, Moody's warns Albania of the blow it could

The rapid increase in housing prices and the banking sector's exposure to the real estate market are becoming one of the risks that could expose the Albanian economy to unexpected shocks.

The warning comes from the international rating agency Moody's, which, although it improved Albania's outlook from "stable" to "positive", highlights the real estate market among the weaknesses that could undermine financial stability in the event of a strong correction.

"Relatively high gross borrowing needs and banking sector risks associated with rapidly rising house prices expose Albania to potential unexpected shocks," Moody's assesses.

Moody's links the risk not only to property prices, but to their interdependence with the financial sector. If prices were to undergo a sharp correction, the decline in the value of collateral could be reflected in the quality of banks' portfolios and lending conditions.

The importance of this risk becomes clearer in the scenarios that Moody's defines for the further progress of Albania's rating. "Factors that could lead to a downgrade or a return to stable outlook are: The outlook could return to stable if economic growth slows significantly, fiscal deficits widen significantly, or if financial sector vulnerabilities increase, particularly those stemming from the real estate market or unexpected external shocks," the report states.

The assessment is particularly important given that the Albanian real estate market has undergone a long cycle of price increases, accompanied by the expansion of lending for the purchase of homes.

The increase in banks' exposure to the property market has become increasingly visible. According to data from the Bank of Albania, at the end of 2025, loans for housing purchases by individuals accounted for 26.8% of the loan portfolio, while loans for real estate by businesses accounted for 24.3%; together, about 52% of the total credit stock of the banking system, with a value of about 470 billion lek, or 4.7 billion euros. By the end of May 2026, the exposure had further increased to 477 billion lek, over 5 billion euros, with an expansion of 12.5% ​​in one year and more than doubling compared to the beginning of 2020.

Precisely in response to developments in the property market, the Bank of Albania has imposed macroprudential restrictions on new loans for real estate, based on the ratio between the loan and the value of the property and the ratio between the installment and the borrower's income.

The International Monetary Fund has also previously identified the same vulnerability. According to the IMF, since 2019, construction activity and real estate prices have increased significantly, while banks' exposure to the sector has expanded. In the third quarter of 2025, real estate-related loans accounted for about 20% of the banking system's total assets. The IMF classified a sharp and unexpected decline in property prices as a risk with a potentially high impact on the economy.

The real estate warning comes in the same report in which Moody's gave a positive signal for the country's overall profile. In the assessment published on September 18, the agency upgraded Albania's outlook from "stable" to "positive" and confirmed the sovereign rating at "Ba3".

The improvement was supported by a strengthening of the fiscal and external position and the acceleration of reforms in the context of the EU accession process. Moody's expects public debt to decrease from 52.9% of GDP at the end of 2025 to 50.2% in 2027, while the current account deficit, which fell to a historical minimum of 0.7% of GDP in 2025, is expected to remain close to 1% in 2026–2027.

The agency also forecasts economic growth of 3.6% in 2026 and 3.5% in 2027, but at the same time highlights that relatively high borrowing needs and risks associated with the rapid increase in housing prices remain weak points for the Albanian economy. (Monitor)


Në përputhje me standarded JTI

Video

SHIKO KANALIN NE YOUTUBE
×