Only positive indicators of the country’s housing market

Q3 2019 was particularly successful for the entire Lithuanian housing market. Compared to the same period of previous years, the number of apartments and houses purchased in Q3 2019 was the largest since 2007. As reported in the Ober-Haus residential market overview, high level of activity in Q3 improved the results of the first three quarters of 2019 both in the country and in the major cities of the country. According to the State Enterprise Center of Registers, within nine months of the year, 4% more apartment and almost 11% more house purchase and sale transactions were concluded in Lithuania compared to the same period in 2018. The increase in the number of transactions within nine months of 2019 in Vilnius, Kaunas, Klaipėda, Šiauliai and Panevėžys was recorded both in the apartment segment (in Vilnius – 6%, Kaunas – 3%, Klaipėda – 9%, Šiauliai – 14% and in Panevėžys – 13%) and the house segment (in Vilnius – 9%, Kaunas – 7%, Klaipėda – 18%, Šiauliai – 19% and Panevėžys – 5%).

The total amount of money spent for homes purchased in the country this year has continued to increase. According to the State Enterprise Center of Registers, within nine months of the year, almost EUR 1.7 billion was spent in Lithuania for home purchase (apartments and houses) or 13% more than during the same period last year. The amounts spent on purchasing apartments increased by 11%, and the amounts spent on purchasing houses increased by nearly 22%.

“The housing market activity continued to soar resulting in a slight increase in the new mortgage volumes in Lithuania,” Raimondas Reginis, Research Manager for the Baltics at Ober-Haus, said. According to the Bank of Lithuania, during the first nine months of 2019, new mortgages in the amount of EUR 969 million were issued in Lithuania or almost 2% more than in the same period of 2018. Interest rates for newly issued housing loans continued a slight, but steady increase. The average annual interest rate for new housing loans in January-September 2019 was 2.4% on average or 0.16 percentage points higher than a year ago.

The unabated housing market activity pace further increased sales prices in the major cities. According to Ober-Haus, the fastest apartment price increase in July, August and September was recorded in Šiauliai and stood at 2.4%. Within the same period, the apartment prices increased in Panevėžys by 2.2%, in Kaunas – 2.1%, in Vilnius – 1.9% and Klaipėda – 1.6%. In a year’s time (September 2019 compared to September 2018), apartment prices increased in Šiauliai by 11.2%, in Panevėžys – 11.5%, in Kaunas – 6.5%, in Vilnius – 5.9% and in Klaipėda – 4.9%.

The private rental sector in the major cities of Lithuania also remained very active and rents increased on average even faster than the apartment sales prices. In January-September 2019, compared to the same period of 2018, apartment rents increased on average by 7% in Vilnius, in Kaunas – 9% and in Klaipėda – 8%.

“The increasing population in the major cities of the country increases the demand of the residential property both for sale and for rent. It is obvious that in the environment of the growing housing sales prices some people are forced to rent homes thus maintaining activity in the apartment rental market,” Mr Reginis said.

More sales in the capital city within nine months than during the entire year 2017 or 2018

Although in Q3 2019 in the three major cities of the country the sales indicators of new apartments in the primary market were high, they were slightly lower than those in Q2 and Q3 2019.

According to Ober-Haus, in Q3 2019, a total of 1,411 newly constructed apartments in completed multi-apartment buildings or buildings under construction were purchased or reserved in Vilnius directly from developers. This is 1% less than in Q2 2019, but 17% more than in Q3 2018. The results of the first three quarters of this year are still more than impressive. Compared to the same period last year, 41% more apartments were realized in the primary market. “In the first three quarters of 2019, more apartments were realized in the primary market than in the whole of 2017 or 2018. The main reasons for the high pace of activity remain the same as in the previous years – continuing construction of new apartments and high demand for new housing,” Mr Reginis said.

The number of unsold apartments in the primary market in 2019 remains very stable. According to Ober-Haus, at the end of Q1 2019, the total number of unsold newly constructed apartments in completed multi-apartment buildings in Vilnius stood at 1,166, at the end of Q2 2019 – 1,048 apartments and the end of the Q3 2019 – 1,085 apartments. However, if we compare Q3 2019 and Q3 2018, the number of unsold apartments has decreased by 30%.

This year 30% more new apartments sold in Kaunas than last year

Over the past three years, active construction of multi-apartment buildings in Kaunas has improved the overall sales indicators in this city. According to the data of Ober-Haus, in Q3 2019, 232 newly constructed apartments in completed multi-apartment buildings or buildings under construction were directly purchased or reserved from the developers in Kaunas. This is 6% less than in Q2 2019, but 21% more than in Q3 2018. During the first three quarters of 2019, compared to the same period last year, 30% more apartments were realized in Kaunas.

“The same as in the country’s capital, the number of unsold apartments has been decreasing in Kaunas during the past 12 months,” Mr Reginis said. At the end of Q3 2019, the total number of unsold newly constructed apartments in completed multi-apartment buildings in Kaunas stood at 205 or 34% less than a year ago. The smallest number of unsold completed apartments has been recorded in Kaunas since the beginning of 2018.

The lowest number of unsold apartments in Klaipėda over the past decade

In Q3 2019, 99 newly constructed apartments in completed multi-apartment buildings or buildings under construction were directly purchased or reserved from the builders in Klaipėda. According to the data of Ober-Haus, this is 32% less than in Q2 2019 and 2% less than in Q3 2018. However, during the first three quarters of 2019, compared with the same period last year, 43% more apartments were realized in Klaipėda.

High indicators of the first three quarters of 2019 show that the demand for new housing in Klaipėda is sufficient and developers essentially do not have any major difficulties in realizing apartments for the market price. We can therefore continue to observe further increase in the volume of multi-apartment buildings, good realization indicators and the declining number of unsold apartments.

During the first three quarters of 2019, developers in Klaipėda built nearly 270 apartments in multi-apartment buildings and in total 450 apartments are scheduled for completion in 2019. In 2018, developers built and offered for sale 429 apartments in Klaipėda. At the end of Q3 2019, the total number of unsold newly constructed apartments in completed multi-apartment buildings in Klaipėda stood at 238 or 25% less than a year ago. “This is also the smallest number of unsold apartments over the past decade and means there are very favorable investment opportunities for developers in this seaport city,” Mr Reginis said.

Full review (PDF): Lithuania Residential Market Commentary Q3 2019