The March construction sector confidence index highlights a chaotic development in the construction sector. Builders, during the questionnaire conducted by the Bank of Albania, stated that they expect orders to be decreasing, but expectations for future prices registered a significant increase this month.
The construction confidence index, which measures the sector's expectations for orders, prices, capacity utilization rate, etc., decreased by 4 percentage points in March, the Bank of Albania announced.
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 total construction index fell to -11.7 in March, from 7.68 in February, being at the lowest level since October 2022.
Orders are expected to decline, but prices will increase
The balance of responses to the order contracts question was negative at -37, indicating that more builders expect fewer orders than those expecting an increase. This is the lowest level since December 2021.
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).
Theoretically, when demand decreases, prices should also fall, but the opposite is happening to builders. They expect prices to continue to rise. The balance of price inquiries was positive, at 34, up from 11.3 in February, marking the highest level since November 2022.
This means that the number of builders expecting price increases has increased.
Market operators contacted by "Monitor" said that transportation, as a result of the increase in oil prices from the crisis in the Middle East, has been reflected in the costs of materials, but the chain effect has been faster than they expected. They hope that the crisis will not last long, as it could create bigger problems than the Russia-Ukraine war. With the latter, the consequences were more isolated and were more easily amortized in the market, but with the current situation, it is not known what will happen.
Companies are asked the question: How do you expect the prices you will set to change over the next 3 months? 1. They will increase; 2. They will not change; 3. They will decrease.
Apartment prices have increased significantly in recent years. In the first half of 2025, data from the Bank of Albania's Fischer Index showed that housing prices in the country increased by 14.6% compared to the previous half, and by 41.7% compared to 2024. Currently, in the capital, the average price of apartments has exceeded 2 thousand euros per square meter.
Falling demand, rising prices and construction, which will continue massively...
Although INSTAT, since 2025, has not reported the full areas being granted for construction permits, as it does not include in the reporting the permits granted by the National Territorial Council (which in recent years has taken over the attributes for permits for high-rise buildings and tourist villages), indirect data indicate that construction will continue on a larger scale than we have seen so far.
According to official data from the Ministry of Finance, revenues from local taxes, represented by the infrastructure impact tax (IIT) for the period January-February 2026, reached a historical record, reaching 11.2 billion lek.
Revenues from this tax are more than four times higher than the previous year (2,586 million lekë in 2M-2025) and break every record of the last 30 years. It is even twice as high as the collections of 2022, when the record for building permits was 2.6 million square meters.
Tirana and the coastal areas have turned into construction sites. In the Durrës area and in Golem, construction is happening everywhere, in the south the hills are turning into tourist villages, in the name of tourist demand. Prices are constantly increasing and no one can predict in this situation what will happen to this market in the future!
