Bleaker outlook for buyers’ moods and possibilities of buying homes
The Ober-Haus Apartment Price Index (OHBI) in Lithuania, which records changes in apartment prices in five major Lithuanian cities (Vilnius, Kaunas, Klaipėda, Šiauliai and Panevėžys), increased by 2.6% in July 2022 (the growth in June 2022 was 2.9%). The apartment prices in the major cities of Lithuania have increased by 22.3% over the last 12 months (the annual growth in June 2022 was 21.2%).
In July 2022, apartment sales prices increased by 3.2% in the capital city, Vilnius, and the average price per square meter reached EUR 2.381 (+73 EUR/sqm). In Kaunas, Klaipėda, Šiauliai and Panevėžys, the apartment prices increased by 1.8%, 2.1%, 1.0% and 1.3% respectively and the average price per square increased to EUR 1,615 (+28 EUR/sqm), EUR 1,527 (+32 EUR/sqm), EUR 1.040 (+10 EUR/sqm) and EUR 1,025 (+13 EUR/sqm) respectively.
Annual growth (July 2022 compared to July 2021) in apartment sales prices increased in all major cities of the country: 25.2% – in Vilnius, 20.9% – in Kaunas, 16.7% – in Klaipėda, 17.5% – in Šiauliai and 17.2% – in Panevėžys.
“The latest information shows that activity in the country’s housing market remains noticeably slower than last year, but overall interest in residential property is still at a high level. This is particularly visible from rising prices of residential property, which show a strong position of sellers both in the primary and secondary markets. However, we may expect more pessimistic moods in the housing market of the country in the course of the year, because both the country’s businesses and the population are already facing various economic challenges. This also reflects in gradually deteriorating overall population mood.
According to the State Enterprise Centre of Registers, almost 3,000 apartments were sold in Lithuania in July or 17% less than in July 2021. Considering that in 2021 the country’s housing market saw record market activity, current market activity remains high, i.e. it returned to the 2019–2020 level (year-over-year). According to Statistics Lithuania, consumer confidence declined by 1 percentage point to minus 12 in July 2022, the lowest rate since April 2020 (the first wave of the Coronavirus pandemic).
It is clear that in the context of current geopolitical and economic challenges, the population is increasingly pessimistic about both their financial situation and the economic development prospects of the country. While the residential property prices and the prices of fitting out or maintenance of homes remain high the possibilities for some people to purchase and maintain a home are declining. This is particularly the case in the segment of new apartments, where prices have recently increased faster than those of older apartments. Therefore, it is likely that at the end of the year the overall market activity may shrink even further, and there will be less and less space for price growth of residential property,” Raimondas Reginis, Head of Market Research for Baltic Countries at Ober-Haus, noted.