Construction costs in 2026: wages up, materials down. Why house prices do not follow costs
According to INSTAT, the cost of building homes rose just 1.1% in a year, while wages rose 4.3%. What that means for buyers, investors and self-builders.
By Galip Sulaj5 min read
How much does it cost to put up an apartment building in Albania today, and how much of that ends up in the price you pay? INSTAT data for the second quarter of 2026, published in early September, gives an answer many buyers do not expect: construction costs rose just 1.1% in a year. Materials got cheaper, while spending on wages grew about four times faster than the index. Here is what that means for buyers, investors and anyone building their own home.
Cover photo: David Antonio Cruz Naira / Pexels
- Construction cost index, Q2 2026 (Q4 2021 = 100)
- 114.7
- Annual rise in residential construction costs, Q2 2026
- +1.1%
- Annual rise in wage costs, Q2 2026
- +4.3%
- Annual change in material costs, Q2 2026
- −0.6%
What the index measures
INSTAT's construction cost index tracks the cost of building homes: materials, wages, machinery, transport and other costs. According to Monitor, it is based on 71 items, with data from 237 building-material suppliers and 97 large construction companies, mostly in the Tirana region. The base period is the fourth quarter of 2021, set at 100.
In the second quarter of 2026 the index reached 114.7. Put simply, building a home costs about 14.7% more today than at the end of 2021. Compared with a year earlier, the rise was 1.1%, the same as in the second quarter of 2025. Compared with the first quarter of 2026, the index rose 0.3%.
Wages up, materials down
After years of rising material prices, the balance has shifted. The chart shows the annual change by cost group in the first two quarters of 2026:
| Category | Q1 2026 | Q2 2026 |
|---|---|---|
| Wages | 4.8% | 4.3% |
| Other costs | 2.5% | 3% |
| Transport | 1.7% | 1.5% |
| Machinery | 1.5% | 1.2% |
| Materials | -0.9% | -0.6% |
| Overall index | 1.1% | 1.1% |
Wages were the fastest-rising group in both quarters: 4.8% in Q1 and 4.3% in Q2. Quarter on quarter, from Q1 to Q2 2026, wages rose 1.1%, more than any other group. Materials, by contrast, are the only main group falling year on year.
| Construction materials | −1.4% | −0.9% |
|---|---|---|
| Plumbing and ventilation materials | −0.9% | −0.7% |
| Electrical and communication materials | +0.5% | −0.1% |
The labour shortage
Why are wages rising? Monitor writes that the sector is short of workers and companies are having to hire from abroad. According to Vox News, Albania issues about 12,000 to 15,000 work permits a year, mainly in construction, hotels and tourism. The country has around 15,000 foreign workers, while the government is aiming for 40,000, and it has signed labour agreements with Vietnam and Indonesia. Business Magazine Albania describes wage pressure as the sector's main short-term challenge.
Why house prices do not follow costs
Construction costs rose 1.1% in a year. House prices, according to the Bank of Albania, rose 10% year on year nationally in the first half of 2026. In Tirana, according to the Keydata Albania index cited by Monitor, the average price reached €2,116/m² in June 2026, while the median was €1,982/m², 3% lower than a quarter earlier.
Two different indices cannot be compared one to one, but the message is clear: construction costs are not the main driver of high prices. The price of an apartment also covers land, permits, financing and the developer's margin, and above all it reflects demand. That has three practical consequences:
For buyers: when a developer justifies a high price with "more expensive materials", the official data does not support that argument for 2026. That gives you a point to use in negotiation, especially in a market where homes are selling more slowly. See also where there is room to negotiate in Tirana.
For self-builders: the materials budget has been stable, but labour is getting more expensive. Fixed-price labour contracts and clear deadlines protect you more than before.
For investors: the gap between construction cost and sale price remains wide, but rising wages and slower sales make careful planning of timelines and financing costs more important.
Photo: Construcción Total / Pexels
If you are buying off-plan, ask the developer whether the price is fixed until handover and what happens if costs rise. Have this written into the notarised contract, together with the delivery date and penalties for delay.
Frequently asked questions
- Residential construction costs rose 1.1% year on year in Q2 2026; the index reached 114.7.
- Wage costs rose 4.3% year on year, while materials fell 0.6%.
- The sector is short of workers and increasingly hires from abroad.
- House prices rose much faster than costs, so the "more expensive materials" argument is not supported by the 2026 data.
- When buying off-plan, ask for a fixed price and clear deadlines in the contract.
Sources
- Monitor: Construction costs rise slightly in Q2, driven by wages, while materials fall (in Albanian), 3 September 2026
- Monitor: Residential construction costs up 1.1% year on year in the first quarter (in Albanian), 4 June 2026
- Business Magazine Albania: Construction costs stabilise, but wage growth becomes the main pressure (in Albanian), 2026
- INSTAT: Construction (in Albanian)
- Vox News: Labour shortage, Albania turns to Asia (in Albanian), 22 August 2026
- Monitor: SPAK investigations and seizures reduce demand for apartments (in Albanian), 22 September 2026
- Monitor: House-price growth slowed in the first half of 2026 (in Albanian), 23 September 2026
Read more
- What is a home worth?A free estimate from similar listings and the official reference prices.
- Buying costs, with a calculatorThe notary tariff, the ASHK fees and who pays which tax, with official sources.
- Buying from abroad, step by stepPower of attorney and apostille, ASHK checks, the notary and paying by bank for those who live outside Albania.
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