When looking at the figures, experts advise buying a house when you need it because listening to advice to “wait” may mean losses after a while.
According to Mantas Galdikas, director of Citus, housing affordability has fluctuated only slightly in recent years. It has now deteriorated slightly and is back to 2018 levels, when there was no talk of “inflated” house prices. However, according to the Bank of Lithuania, affordability is better than in popular European cities such as Stockholm, Prague, Warsaw, Krakow, Tallinn, and others.
“Recently, wage growth has slowed down and house price growth has accelerated, but from a more philosophical point of view, a couple of years ago, today, and in another couple of years, housing should cost relatively the same. That is, if wages and the population in the major cities grow, there will be no statistical increase in house prices as affordability does not change significantly. Therefore, there are many factors to consider, and, as in most cases, those who invested earlier will benefit,” believes the head of Citus.
550 Citus clients became owners of new homes in one year
Like for many companies, 2022 was a year of tension and challenges for Citus. Construction and sales plans are clouded by disrupted supply chains and spikes in material prices, not to mention uncertainty in the energy sector and other global challenges. However, according to Mr Galdikas, the company is not changing its plans, obtaining financing and responsibly fulfilling its commitments to its clients - this year alone Citus is going to sign almost 550 notarial contracts in the already completed Klevų Namai, as well as in the second stage of Miško Ardai, Link Ten, part of Radio City, and PaJustis, which are nearing the finish line.
“So far we have signed a third of the notarial agreements planned for this year, but we are already seeing results. Those buyers who did not listen to the calls to wait for the “price drop” that did not happen and who signed preliminary contracts 1-2 years ago have saved money compared to current prices. Notarial contracts were valued at over €14 million in 2020 and more than €28.5 million in 2021. Meanwhile, the value of notarial agreements to be signed with clients of projects managed by Citus in 2022 will reach EUR 65.93 million. This “threatens” to become the best result in the history of Citus,” says Mr Galdikas.
To date, almost 200 sale and purchase agreements have been signed in Citus projects, with a value of around EUR 20 million. For example, the value of apartments in Miško Ardai Phase II has risen by 49.7 per cent, in Klevų Namai and Radio City the value of apartments has increased by about 20 per cent, while the value of notarial contracts planned for PaJustis and Link Ten is already approaching 30 per cent higher than when the sales in these projects started.
“We have been seeing for years that buyers save millions by taking an early decision and not waiting for anything. Buyers who reserved and priced their homes earlier, taking into account the prices of the homes on the day of signing their notarial contracts, have saved EUR 15.6 million. Of course, a large number of buyers were scared by the initial shock of the pandemic and abandoned their plans, but those who did not and stuck to the plan are now rejoicing as property prices continue to rise and reach a new record every month,” says Mantas Galdikas, the director of Citus.
He reminds us of a truth that has been repeatedly said: you should buy a house when you need it, not when everybody is calling for it, when it’s “fashionable”, or when there is a fear of missing out (FOMO). The same applies when people are urged not to buy because of possible threats or price falls because after a while it becomes clear how much they have lost.
In Vilnius, the value of reserved housing could have risen to €330 million in two years
Citus experts observe a similar trend in the whole market. In Vilnius, the average price of a square metre has risen from EUR 2,242 to EUR 3,255 in August 2020 compared to August 2022 - a 45.2% increase. Even if they had decided to buy a year ago, Vilnius residents could have saved 24%.
“When the capital’s market is broken down by economic class, the difference is even more obvious. For example, if people had bought apartments in the economy segment, they would have saved 56.3%, while a year ago - 26.4%. The prices of the medium segment housing have increased by 52.8% in two years and by 30.8% in a year. The prices of the prestige and luxury segments have increased by 48.9% and 27.5% respectively in two years, and by 25.2% and 11.9% in a year,” calculates M. Galdikas.
Even more impressive is the total value of homes sold. For example, Citus analysts calculate that as of August 2020, as many as 9,028 homes have been sold in one year in Vilnius, in all segments, with a total area of almost 503,000 sqm. The average price at the beginning of the period was, as mentioned above, EUR 2,242, and at the end - EUR 2,625/sqm. If we assume that all the homes were reserved in the summer of last year and the notarial contracts were concluded in August last year, the change in the value of the homes would amount to as much as EUR 192,5 million.
If we look at the period from August 2021 to the same month this year, we can see that the number of homes sold in Vilnius was much lower and their total area was smaller (4,098 homes with an area of 219.3 thousand sqm), but prices grew faster, from EUR 2,625 to EUR 3,255/sqm. Therefore, the total potential change in the value of all sold dwellings would be less significant than the number of units sold - EUR 138.2 million.
In Kaunas, the average price per square metre increased from EUR 1,475 to EUR 2,240 over a couple of years, from August 2020 to August 2022, i.e. by 51.9%, and by 13.5% in one year.
If we make similar calculations on the Kaunas market, we would also get huge amounts. Between August 2020 and August 2022, 1,279 homes with a total area of 77,400 sqm were sold in the temporary capital. If we add the prices that existed at the time to the equation, the value of the homes could have risen by EUR 38.6 million in a year if they had all been reserved in August 2020 and the notarial deeds signed one year later. Over the period 2021-2022, 1,234 homes were sold with a floor area of 73,400 sqm and a value of EUR 19,5 million higher at end-of-period prices than a year earlier.
“In Kaunas, housing prices grew at a similar rate as in Vilnius. The prices of the economy segment have increased by 47.4 per cent in two years and by 10.9 per cent over the year. The prices of the medium segment have increased by 42.6 per cent and by 17.5 per cent, and the prices of the prestigious segment have increased by 42.1 per cent and 19.6 per cent. Most of the supply is in blueprints and sales are limited by developers themselves. Meanwhile, rental prices are at historic highs and are further catalysed by foreigners and specialists in various fields, who have added to the population of Vilnius and are able to pay more than ever for housing or renting,” concludes the Citus director.
