Rising house prices, UN report: Money laundering a contributing factor, have become unaffordable

Tirana is considered one of the seven main European capitals with high levels of unaffordability of buying a home.

A report by the Economic Commission for Europe at the United Nations that has made an assessment of Albania's profile in terms of urban development, housing and land management also underlines that the increase in prices may have been influenced by money laundering.

"Organized formal developments target high-priced housing segments. Up to 32 percent of residential and commercial properties sold in the first half of 2021 were purchased by non-residents; money laundering may have been a contributing factor to the increase in prices in Tirana and coastal areas.

Tirana is among the seven main European cities with high levels of housing unaffordability," says the report dedicated to Albania.

The latter, in this context, analyzes that the purchase of a home by low-income families has become difficult or unaffordable.

"Against this background, multi-apartment buildings inherited from the socialist era suffer from a lack of investment and lack of maintenance. The overcrowding rate for the general population is more than 58 percent, which is the highest in Europe, except for Montenegro.

These structural inequalities in housing markets make access to housing unaffordable for low-income groups," the report assesses.

The recently published document states that in Albania, Article 59 of the Constitution recognizes the right to adequate and affordable housing as one of the social objectives of the Albanian State and Article 18 on equality, ensures the protection of different social groups against any form of discrimination.

“However, following mass privatization and informal construction in the 1990s, the housing sector in Albania is dominated by private home ownership, with many new self-built houses and other buildings originally erected illegally and in residential areas.

The rented sector of social housing (whether public, private or mixed) in Albania is very small, representing about 0.1% of the total number of inhabited dwellings.

This sector cannot compete with the private market. The housing market with mortgage loans is just developing (the share of homeowners who pay off such a loan is less than 1 percent).

This is partly due to the important role of the informal and self-built sector where the construction activity is done through cash and remittances, the report states.

The latter brings to attention some recommendations that can be taken by the institutions in our country to help the weakest groups and put into operation the mechanisms for access to social housing. Monitor