Construction will continue with momentum, but builders are downplaying future prices and demand.

2026-07-03 07:14:30, Aktualitet CNA

Construction will continue with momentum, but builders are downplaying future

June has been a pessimistic month for builders, as they expect future customer orders to fall, while the number of those expecting a decline in prices has also increased.

According to the Bank of Albania, the Construction Confidence Indicator (CCI) decreased by 0.8 percentage points in June. The decline in confidence of construction businesses was determined by the declining estimates for order contracts, while current construction activity remained at the same levels. Expectations for future prices are estimated to be decreasing.

The index, which is measured within the framework of the economic confidence index, asks builders questions such as:

-How has your construction activity been over the past 3 months?

-What are the main factors that limit your construction activity?

-How do you currently evaluate orders (ordering contracts)?

-How do you foresee the future performance of your business situation?

-How do you expect the prices you will set to change over the next 3 months?

-To what extent are you currently utilizing your production capacity?

-How has your company's financial situation been over the past 3 months?

According to the Bank of Albania methodology, the balance indicator takes values ??between -100 and +100. An indicator above 0 indicates a greater number of positive than negative responses in a given period.

The balance of responses to the order contracts question was negative at -26.2, indicating that more builders expect fewer orders than those expecting an increase. The balance has worsened for three consecutive months.

Businesses are asked the question: How do you currently evaluate orders (order contracts)? 1. More than enough (above normal); 2. Sufficient (normal for the season); 3. Not enough (below normal).

Unlike previous months, where despite the decline in orders, prices were expected to be increasing, builders are now increasingly expecting the trend to be downward.

The balance of questions about prices continues to remain positive, with 14 points in June, but with a marked contraction compared to the previous month, when the indicator was 22 and well below levels of around 30 points in March and April.

The Bank of Albania, in its latest report on housing price developments, stated that the pace of housing price growth has slowed, especially in the capital. The Fischer index calculated by the Bank of Albania showed that the average price of homes sold during the period increased by 11.7% compared to the previous six months and by 28% compared to the previous year. However, the annual price growth slowed down from the 41.7% level reported in the first half of 2025.

In particular, the market appears to be slowing down significantly in the capital. The sales price index in Tirana was reported to be unchanged from the previous half-year and increased by 4.4% compared to the previous year. The annual price increase has fallen sharply from the 32.6% level in the first half of 2025.

The Bank of Albania estimates that the main contribution to the increase in the value of the general price index was made by the increase in the value of the index calculated for coastal areas.

Compared to the previous six months and the year before, it is noted that the weights of transactions for which the purchase price of the property was the same or up to 5% lower than the price requested by the seller have similar weights to the first six months.

Demand is expected to decline, but construction will continue at a high pace.

Although the National Council for Territory and Water (KKTU), which already issues permits for buildings over 7 floors, has consistently issued construction permits for towers and resorts, there has been no transparency about the area granted for construction in 2025 and the first 5 months of 2026, as INSTAT does not report it.

An indirect indicator is the high revenues being collected from local taxes, 50-60% of which comes from the infrastructure impact tax. From local taxes, for the period January-May 2026, about 24 billion lek in revenue has been collected, doubling from the same period in 2025, or about 12.7 billion lek more.

Based on these revenues, "Monitor" has previously calculated that in the first 5 months of the year alone, construction permits were granted for around 2 million square meters of construction, out of 2.5 million square meters that were granted for the entire year 2024, which until now held the record for permits in the last decade, indicating an even more massive continuation of construction in the country, if all projects are carried out, which have already paid the infrastructure impact tax./Monitor.al