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Money laundering and the wealthy investing in empty homes has made prices unaffordable

2024-06-10 07:19:00, Ekonomi CNA

Money laundering and the wealthy investing in empty homes has made prices

Illustrative photo, taken from Google

The price of houses has become unaffordable for the majority of the population, due to the high demand, while on the other hand, in contrast, there is the fact that part of the housing stock is empty.

The Profile of Albania for Urban Development, Housing and Land Management, published these days by the United Nations Economic Commission for Europe, brings to attention the reasons that have made the purchase of a home unaffordable for the majority of the population.

"While Albania has some of the highest rates of unoccupied housing in Europe, the overcrowding rate for the population exceeds 58 percent, the highest in Europe, with the exception of Montenegro.

These structural inequalities are the result of increasing levels of social and spatial inequalities. Vacancies have resulted from mass emigration from poorer and rural areas, on the one hand, resulting in numerous derelict properties.

On the other hand, wealthier groups have invested in new properties as a "safe haven", often leaving these properties unoccupied. This only generates further demand and price increases in high demand areas.

Money laundering has been another factor contributing to the increase in housing prices in Tirana and in the coastal areas of Albania.

Combined with low average household disposable incomes, it makes buying a new home in desired areas unaffordable for most.

This has led to high rates of overcrowding, especially among the low-income group. "Tirana is one of the seven main European cities with the highest levels of housing unaffordability," the report assesses.

Providing safe, affordable and adequate housing has been a major concern for national housing policy.

At the top of the introduction, the report draws attention to the guarantee of the right to adequate housing.

"Article 59 of the Constitution of Albania recognizes the right to suitable and affordable housing as one of the social objectives of the Albanian state. Also, Article 18 on equality ensures the protection of different social groups against any form of discrimination.

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

The social sector of rental housing (whether public, private or mixed) represents only about 0.1 percent of the total occupied housing and cannot compete with the private market.

The mortgage market (in this case, it's only about homes bought from loans whose interest is subsidized by the government as part of certain programs) is also just developing, with less than 1 percent of homeowners currently paying a down payment. such.

This is partly due to the important role of the informal and self-built sector, where construction activities are mainly financed through money and remittances.

Organized formal developments (new apartment buildings) target high-priced housing segments in areas with high demand and are unaffordable for the majority of the population," the report states./ Monitor.al