Positive price changes show greater importance of residential property in the pandemic
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 0.6% in November 2020 (0.4% increase was recorded in October 2020). The annual apartment price growth in the major cities of Lithuania was 4.1% (the annual apartment price growth in October 2020 was 4.1%).
In November 2020 apartment prices in the capital grew 0.6% with the average price per square meter reaching EUR 1,671 (+9 EUR/sqm). Apartment prices in Kaunas, Klaipėda, Šiauliai and Panevėžys in November grew by 0.6%, 0.7%, 0.1% and 0.8% respectively with the average price per square meter reaching EUR 1,184 (+8 EUR/sqm), EUR 1,157 (+8 Eur/sqm), 766 (+1 EUR/sqm) and EUR 755 (+6 EUR/sqm).
In the past 12 months, the prices of apartments grew in all major cities: 4.6% in Vilnius, 3.6% in Kaunas, 2.2% in Klaipėda, 5.0% in Šiauliai and 6.1% in Panevėžys.
“Despite fluctuations, both the activity of the housing market and the sales prices of apartments in Lithuania and the major cities of the country continue to show resistance to the current pandemic. Although the increase in the sales prices of apartments in major cities almost stalled in March-August 2020 (the average monthly growth was 0.1%), in September-November a faster increase in prices was recorded (the average monthly growth was 0.4%). Following the lifting of the first lockdown, the housing market saw a consistent and rapid recovery indicating the continuing need for housing property. The demand for isolation and work from home due to the pandemic also increased the importance of housing in the context of the real estate market,” Raimondas Reginis, Research Manager for the Baltics at Ober-Haus, said.
Changes in the prices of apartments remain positive this year, although the activity in the apartment market faces greater fluctuations. According to the State Enterprise Center of Registers, more than 2,800 apartments were purchased in Lithuania in November 2020 or 23% less than in October 2020. Looking at the long-term data, there is usually a slowdown in the activity in the apartment market in November and December, i.e. in 2004–2019, the number of apartment transactions in November compared to October tended to decrease by about 5% on average. However, in November 2020, a decrease of 23% in the number of transactions was recorded testifying to the rapidly deteriorating epidemiological situation in Lithuania. Of course, it must also be noted that, according to the number of apartments sold in Lithuania, October 2020 was historically one of the most successful months.
The recent change in population sentiment is well illustrated by the consumer confidence index, which, according to Statistics Lithuania, decreased by 5 percentage points in November 2020. “The most significant impact on the decline of this indicator in November was far more pessimistic forecasts for the country’s economic situation than in September or October. After assessing the overall epidemiological situation in the country and the overall negative mood, it is likely that in December the market activity will be even worse than in November 2020, and the increase in prices in the major cities may slow again,” Reginis added.
Full review (PDF): Lithuanian Apartment Price Index, November 2020