Iris SHAHINI
Economic University of Tirana, Accounting Department
irisshahini @gmail.com
Orfea DHUCI
Economic University of Tirana, Accounting Department
odhuci@alpha.gr
Abstract :
The current economic crisis has highlighted that a well-functioning financial system is significantly important for economic growth. This study investigated factors affecting housing finance supply in Albania.
Housing Finance is a major factor determining the quality and tenure of housing consumption, the overall financial portfolio of the public and the stability and effectiveness of the financial system (Diamond and Lea 1992a). Struyk and Turner (1986) and Stephens (2000 & 2002) argued that housing finance plays an important role in shaping each country’s wider housing system and the housing system takes important social and economic consequences. Then, it follows that the development of a viable housing finance system is of utmost importance in the developed economies.
For a typical house-owner, the house is a major asset in his portfolio and for many household, the purchase of a house represents the largest (and often only) life long investment and a store of wealth (Goodman 1989; Sheppard 1999; Malpezzi 1999; Bundick and Sellon Jr 2007; Dickerson 2009). In societies like Albania, where social housing is not on the priority list of government, the housing affordability would have to be looked at from the point of view of individual’s ability to raise money needed to meet the cost or price of their housing needs. The first source of funding for individual is their income. This is often the cheapest source because there is no payment of extra cost in form of interest. The problem that arises in case of individuals in the emerging economies is that income levels are generally low. The low income means low disposal income which prohibits the individuals to qualify for housing loans.