Citus Experts: circumstances are powerless against Vilnius residents' willingness to buy a home, but the rental market also threatens prices

The brutal war launched by Russia in Ukraine, the sanctions echoed in the global economy and in individual sectors, the difficulties caused by the pandemic two years ago, again, to individual sectors of the market, even the halt in sales by some developers or the drought in supply – nothing is suppressing the demand in Vilnius's primary housing market.

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May 10, 2022, 11:43 AM, atnaujinta May 10, 2022, 11:44 AM

On the contrary, in April, according to the preliminary data of Citus analysts, the number of reservations in the capital almost doubled – 288 apartments (19 contracts were concluded in projects managed by Citus in Vilnius and Kaunas) and terraced houses were agreed for sale, although in March, when this number reached 158, some experts signalled market lethargy.

„It is obvious that there is a demand for housing in Vilnius: people need it, they want to buy a home, and customers are more courageous than businesses. The number itself is not spectacular – last year it was probably 4 times higher, but it is obvious: buyers say – give us apartments or terraced houses. We need them, and we are willing to buy. Especially since prices are constantly rising and there is no end in sight, so any delay in making a decision will be costly if we think rationally“, says Šarūnas Tarutis, Head of Investments and Analyses at „Citus“, the real estate services company.

During the month, the average prices of new homes on offer in the capital grew by slightly less than 2.5% – from EUR 2 955 to EUR 3 024; however, in some popular projects, the growth reached 8, 10 or even 14%. Bearing in mind that this is happening even in a tight environment, which, in the opinion of some market participants, should have dampened the demand and halted the price growth.

„Prices have nowhere to retreat. The song is repeating itself: materials and construction workers are getting more expensive, supply is constantly decreasing, but there is another factor that can make housing more expensive, both in the primary and secondary markets,“ says a Citus expert. „The rental market is also experiencing things that have not been seen for a long time: it contracted at the beginning of the pandemic but probably almost forgotten the shock already, while supply has shrunken by a factor of six since January this year. Six times, Karl! Naturally, rental prices have also risen very significantly, which will undoubtedly make people consider buying a home when looking at long-term investments and will also increase the demand for investment housing. This will also put considerable upward pressure on prices.“

According to Š. Tarutis, the rental market has also been boosted by the influx of people fleeing the war zone in Ukraine or those who arrived from Belarus some time ago. With rental prices rising rapidly, buying a home is becoming more attractive and catalysing sales. However, even in this segment, supply is shrinking sharply: in Vilnius, in April, there were only 3,202 new homes to choose from, whereas in Lithuania's largest city, the range would need to be virtually twice as large. Meanwhile, only two new phases appeared on the market during the month, with no new projects.

In Kaunas, however, the primary housing market did not have any: in the temporary capital, Citus analysts only recorded a decrease in supply, but not a single new project or stage was presented. In April, the „warehouse“ of the Kaunas market consisted of 1,176 dwellings.

Average prices here also changed in a similar way as in Vilnius: they increased from EUR 2 072 to EUR 2 124 per sq m. Some 59 apartments and townhouses received new owners – 34% more than in March.

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