Rental prices are rising rapidly, making a key contribution to inflation growth. The Bank of Albania states that the cause is high demand for rental housing. In just the first two months of the year, rents increased by 8.5%.
The cost of renting a home has been steadily increasing over the last two years. The Bank of Albania says that high rental prices were also the main cause of inflation growth last year. The bank's annual report states that inflation in 2025 was 2.6%, with rental prices alone rising by 4.2%, the highest figure ever recorded.
"Upward pressures on these prices came from increased demand for rental housing and limited supply of long-term rentals, along with greater exchange rate stability and rising housing prices in the country," the report says.
Due to tourism development, a large portion of housing previously offered for long-term (monthly) rent has now been converted to short-term rentals. That is, daily rentals or rentals for just a few days. This wave of rising housing rental costs is not expected to slow down this year either. The bank's figures show that this category's contribution to inflation formation for the first two months of 2026 was 1%, meaning if inflation for that period was 2.4%, the impact of rising rents was 1%. Meanwhile, the increase in rents over the two-month period was 8.5%.
According to market experts, tourism is influencing this price increase, as it has boosted demand for rental apartments through online platforms like Booking or Airbnb. The annual report also analyzed the property sales market, highlighting that 'housing affordability' is becoming increasingly important due to high prices. Therefore, the Bank says it is intervening by limiting housing credit due to potential implications from banks' exposure to this sector.
"Preliminary findings suggest deviations from sustainable long-term levels, with potential implications for household financial stability, the banking sector, and economic growth. This evidence supports the Bank of Albania's preventive approach to managing banks' exposure to the real estate market," the report states.
In just the first half of 2025, housing sale prices increased by 41.7%, which is why the primary source of financing remains credit. About 58% of properties sold by agents were purchased with bank loans, with the loan covering 60% of the value in the vast majority of cases.