Housing Supply Growth Does Not Guarantee Improved Access to Housing

Key Findings

• Deep and growing territorial concentration: the share of the Tirana–Durrës–Vlorë triangle in the national total of permits rose from 72% in 2005 to 97% in 2025 (Annex A). Tirana alone rose from 38% to 87% of the national total over the same period, while Dibër, Kukës, and Gjirokastër continue their demographic and economic decline.
• Quantified demographic mismatch (the central new finding): the number of Albanian households fell from 780,000–810,000 (2006) to 740,000–750,000 (2025); the mismatch index (housing units per official permits ÷ Δ households) stays below 0.4 in every county, but every construction in counties with declining households remains demographically unjustified, while in Tirana formal permitting still lags the real growth of households — a gap filled mainly outside the formal register (see “Informality Factor” ≈88.5%, Chapter 2.1–2.4).
• Unbalanced financing: Tirana and Durrës administer around 54% of national bank deposits, creating a self-reinforcing financial advantage for already-developed areas.
• Growing affordability gap: the average apartment price in Tirana has nearly doubled from 2016 to 2025 (from €916/m² to €1,833/m²), while wages have not kept pace; 17+ years of income are needed for a standard apartment in the capital.
• Structural dependence on remittances and informal flows: remittances have historically channeled 15–20% of GDP in certain periods into the economy and finance an estimated 25–35% of total housing purchases (up to 45% in Tirana/the coast), while informal flows finance an estimated 10–18% of transactions (up to 15–25% in coastal areas) — see Chapter 4.1 for the full breakdown by financing source.
• Four groups are systematically excluded from the housing market: young people, families without existing property, average-wage workers, and returning emigrants without significant capital.
• High local fiscal risk, as several large municipalities have built a budgetary dependence on revenues linked to construction permits, exposing them to any slowdown in the sector.

Main Proposals (summarized)

• Strengthening and expanding a National Affordable Housing Program that combines public land, public-private partnerships, and interest-rate subsidies for families below a defined income threshold.
• Establishing a National Local Fiscal Diversification Fund, financed through progressive taxation of high-value real estate transactions.
• A package of conditional public investments (infrastructure, digital connectivity, fiscal incentives) for counties with untapped potential (Korçë, Shkodër, Elbasan, Fier).
• A beneficial-ownership registry and mandatory digital payment above a value threshold for real estate transactions, as an anti-informality measure.
• Diaspora instruments (investment bonds, matched savings funds) that channel remittances toward productive investment, not only toward real estate.

Risk Structure through 2030

The report identifies three main scenarios, beginning with the pessimistic scenario, the baseline scenario (most likely), and the optimistic scenario, quantified through the Mismatch Index and the Informality Factor (Chapter 2.1, 8.1).

In the baseline scenario, new formal housing units remain modest (4,500–6,000 during 2025–2030) while the Informality Factor remains high (85–90%). Only the optimistic scenario, supported by transparency reforms (Chapter 9.4), predicts a significant narrowing of this gap.