Apartment prices remain stable though some sellers agree to negotiate
The Ober-Haus Lithuanian apartment price index (OHBI), which records changes in apartment prices in the five major Lithuanian cities (Vilnius, Kaunas, Klaipėda, Šiauliai and Panevėžys), increased by 0.1% in April 2020. The annual apartment price growth in the major cities of Lithuania was 6.8% (the annual apartment price growth in March 2020 was 7.1%).
In April 2020 apartment prices in Vilnius and Kaunas grew by 0.1% respectively with the average price per square meter reaching EUR 1,640 (+2 EUR/sqm) and EUR 1,167. In Panevėžys price grew by 0.3% with the average price per square meter reaching EUR 738 (+2 EUR/sqm). Meanwhile in Klaipėda and Šiauliai apartment prices remained stable and were the same as in last month EUR 1.140 and EUR 752.
In the past 12 months, the prices of apartments grew in all major cities: 6.9% in Vilnius, 6.6% in Kaunas, 5.1% in Klaipėda, 9.3% in Šiauliai and 10.3% in Panevėžys.
Over the last few months, there have been clear trends in apartment sales prices – the relatively rapid and steady growth in apartment sales prices recorded in the country’s major cities at the beginning of this year has now come to a virtual halt. Due to the restrictions imposed by the coronavirus and the sharp decline in the population’s expectations regarding the country’s economic and financial situation, this April the overall housing market activity in Lithuania fell to the level of 2012,” says Raimondas Reginis, Ober-Haus Research Manager for the Baltics. According to the State Enterprise Centre of Registers, the number of apartment transactions concluded in April 2020, compared to the monthly average in 2019, decreased by 23% in Vilnius, and by 29%, 55%, 57% and 58% in Kaunas, Klaipėda, Šiauliai and Panevėžys respectively.
The numbers of agreements for purchasing new construction apartments plunged to record lows. According to Ober-Haus, the sales volumes of new construction apartments in Vilnius, Kaunas and Klaipėda in April this year, compared to the 2019 indicators, decreased on average by as much as 89% (91% in Vilnius, 85% in Kaunas and 77% in Klaipėda).
The sharp decline in housing market activity in March and April this year interrupted the ongoing price growth. While the sales prices of apartments (old and new construction) in the country’s larger cities grew at a rate of 0.5-0.6% per month in January and February 2020, in March and April of this year growth was only 0.1%.
“At present, sellers are generally reluctant to reduce the prices of homes for sale, as the current period of uncertainty is relatively new and most of them do not rush to sell urgently. The most negative changes in home sales prices were caused by the growing number of sellers who do need to sell their homes more quickly. If the number of such sellers in the market only increases, then the probability of seeing a decrease in the general level of housing prices will become more likely,” says R. Reginis.
“We are seeing that sellers who would normally want to sell their homes at an above-market prices are now much more flexible in responding to offers from potential buyers. In the growing real estate market environment, some sellers were very optimistic about the possible price they would get for their home, now such expectations are almost gone,” notes the Ober-Haus representative. As a result, such sellers are now forced to lower their exaggerated bar of expectations and are willing to reduce the price of their homes to more market-appropriate levels. If in the past the optimistic expectations of sellers were eventually met due to the rising level and the most positive sentiments regarding the housing prices throughout the market, this is no longer the case and such sellers are becoming more accommodating.
Full review (PDF): Lithuanian Apartment Price Index, April 2020