In 2020, apartment prices remained stable, but growth notably slowed down

2021-01-14

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 0.9% in December 2020 (0.6% increase was recorded in November 2020). The annual apartment price growth in the major cities of Lithuania was 4.1% (the annual apartment price growth in November and October 2020 was 4.1%).

In December 2020 apartment prices in the capital grew 1.3% with the average price per square meter reaching EUR 1,931 (+22 EUR/sqm). Apartment prices in Kaunas, Klaipėda and Šiauliai in December grew by 0.3%, 0.8% and 0.6% respectively with the average price per square meter reaching EUR 1,188 (+4 EUR/sqm), EUR 1,166 (+9 Eur/sqm) and EUR 771 (+5 EUR/sqm). In Panevėžys no price changes were recorded and average apartment price remained the same as in November – EUR 755.

In the past 12 months, the prices of apartments grew in all major cities: 4.8% in Vilnius, 3.4% in Kaunas, 2.6% in Klaipėda, 3.9% in Šiauliai and 3.8% in Panevėžys.

“Although the pandemic in March-August 2020 largely stopped the increase in sales prices of apartments in the major cities of the country, a faster growth was again recorded at the end of the year. This resulted in a significantly lower annual price increase (4.1%) than in 2019, when apartment prices in the country’s major cities increased on average by 7.2%,” Raimondas Reginis, Research Manager for the Baltics at Ober-Haus, said. According to Statistics Lithuania, in December 2020, the annual inflation rate calculated according to the Harmonized Index of Consumer Prices was negative and stood at -0.1%, so the real sales prices of apartments (less inflation) increased even more rapidly – by 4.2%.

It is clear that the growing importance of housing in our daily lives during the pandemic and the financial capabilities of the population to purchase homes have protected the entire housing market against more serious negative consequences. According to the State Enterprise Centre of Registers, in 2020 almost 33,000 apartments were purchased in Lithuania, 8.4% less than in 2019. At the same time buyers spent 2% more on buying apartments in 2020 than in 2019. In H2 2020, the market activity bounced back and the number of purchased apartments was the same as in H2 2019.

Despite the second wave of the pandemic and the stringent containment of lockdown, the overall expectations of the population remain at a much higher level than those during the first lockdown. According to Statistics Lithuania, the consumer confidence index fell by five percentage points in November 2020 to minus 4, and in December it increased by one percentage point to minus 3. By comparison, in April and May 2020, the consumer confidence index dropped to minus 16 and minus 11, respectively.

“Therefore, despite the continuing challenges caused by the pandemic to the country’s economy and, in particular, to certain sectors of the economy, very good indicators of 2020 and the continuing positive moods in the housing market allow us to hope that we will avoid more serious negative consequences in the housing market in the near future. However, the decline in the overall activity of the housing market or the slowing down of price increase in the first half of this year is certainly possible,” Reginis said.