A symbolic decrease in the price of apartments in Kaunas and Klaipėda in May
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), remained unchanged in May 2020 (0.1% increase was recorded in April 2020). The annual apartment price growth in the major cities of Lithuania was 6.3% (the annual apartment price growth in April 2020 was 6.8%).
In May 2020 apartment prices in Vilnius and Šiauliai grew by 0.1% and 0.3% respectively with the average price per square meter reaching EUR 1,641 (+1 EUR/sqm) and EUR 755 (+3 EUR/sqm). Meanwhile in Kaunas and Klaipėda was recorded 0.1% price decrease with average price per square meter reaching EUR 1.167 and EUR 1.139 (-1 EUR/sqm). In Panevėžys no price changes were recorded and average apartment price remained the same as in April – EUR 738.
In the past 12 months, the prices of apartments grew in all major cities: 6.4% in Vilnius, 5.9% in Kaunas, 4.6% in Klaipėda, 8.9% in Šiauliai and 9.2% in Panevėžys.
The latest data on the apartment segment show that the market continues to operate in the waiting mode. The number of the registered transactions for apartment sales in May 2020 decreased by 37% in Lithuania compared to the monthly average last year. Some of the potential buyers who have withdrawn from the market are waiting for a more stable economic situation in the country and more certainty concerning the situation with the virus, while the rest of the buyers are expecting a fall in the housing prices and opportunities to take advantage of the situation.
“If some buyers have withdrawn from the market for personal financial reasons or poorer outlook in the economic future, other potential buyers are willing to wait for lower prices and are trying to push the home sellers further. The buyers who are currently planning to buy residential properties often suggest to sellers to reduce their prices by as much as one tenth in order to sell. However, the vast majority of sellers are reluctant to accept such offers today and the negotiations are often disrupted or a marginal discount is offered on the sales price like in previous years,” Raimondas Reginis, Research Manager for the Baltics at Ober-Haus, said.
As a result, sellers of residential property still feel strong enough and are reluctant to take any hasty decisions regarding significant reduction of sales prices. “The further direction of the price curve for apartments will depend on the extent to which the uncertainty due to the virus will continue (number of cases of infection, prospects for the tourism and accommodation sector, financing housing conditions, etc.) and the pace at which the economy will recover. This will determine the further mood of potential buyers who have withdrawn from the market and the specific decisions on purchasing housing. If the activity in the apartment sector in the country’s major cities starts to increase in the second half of this year, it will give additional optimism for the whole market and the likelihood of significant negative changes in sales prices will be significantly reduced,” Reginis noted.
Full review (PDF): Lithuanian Apartment Price Index, May 2020