Housing price increase is gaining momentum
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 1.9% in March 2021 (0.9% increase was recorded in February 2021). The annual apartment price growth in the major cities of Lithuania was 7.2% (the annual apartment price growth in February 2021 was 5.3%).
In March 2021 apartment prices in the capital grew 2.2% with the average price per square meter reaching EUR 1,766 (+38 EUR/sqm). Apartment prices in Kaunas, Klaipėda, Šiauliai and Panevėžys in March grew by 1.2%, 1.6%, 2.7% and 2.4% respectively with the average price per square meter reaching EUR 1,224 (+15 EUR/sqm), EUR 1,211 (+19 Eur/sqm), 831 (+22 EUR/sqm) and EUR 813 (+19 EUR/sqm).
In the past 12 months, the prices of apartments grew in all major cities: 7.8% in Vilnius, 4.9% in Kaunas, 6.2% in Klaipėda, 10.4% in Šiauliai and 10.5% in Panevėžys.
“At the end of 2020/start of 2021, it seemed that after a sluggish period in mid-2020, we saw an instantaneous sales price rise, yet the performance in March 2021 shows that the price increase is accelerating. Looking at historical data, the monthly almost 2% increase in apartment prices is exceptional, because the last time such a monthly increase was recorded in the country’s cities only in 2007. The relatively high overall price change in March was due to the faster rise in prices in all major cities across various apartment segments.
This year we can see a faster increase in apartment prices in the segment of new housing. For example, in Q1 2021 the prices of older apartments in Vilnius, Kaunas and Klaipėda increased by 2.7–3.8% and the prices of new apartments in these cities increased by 3.7–4.9%. Every day, we witness rapid increase in the expectations of sellers and how the increasing prices of apartments still attract buyers. In particular, this is obvious in the new apartment segment, where there is a supply shortage at the moment and developers are sometimes unable to respond to the changing market situation. As a result, buyers looking for new homes in Vilnius face challenges. Due to the lack of apartments in already completed projects, they are forced to choose apartments in the planned projects or projects that have recently started.
The rising apartment prices in the cities are not exclusive to Lithuania. Similar trends can be observed across Europe. According to Eurostat, in Q4 2020, a total annual increase of 5.7% in home sales prices was recorded in 27 EU countries, which is the fastest increase since 2007.
This year’s record-breaking transactions for the acquisition of new homes in the capital city give reason to predict even faster increase in home prices later when the transactions are finalized and official statistics will record impressive amounts of cash. Thus, looking at the current situation in the European and Lithuanian housing market, it seems that the price increase is gaining momentum,” Raimondas Reginis, Research Manager for the Baltics at Ober-Haus, said.
Full review (PDF): Lithuanian Apartment Price Index, March 2021