Housing Market in Vilnius: While The Volume of Construction is Rapidly Increasing, Living Area Decreases
2016-10-26
Changes in the supply of new housing are also observed in the market for detached and semi-detached houses: the increasing income of the population and the growing need for larger living area have recently encouraged developers to direct some of their investment into the development of houses. The most distinct changes are recorded in Vilnius. While 2012 and 2013 can be viewed as the start of the period of revival of construction of apartment buildings, activity in the market for houses has increased in 2014 and 2015. In 2016, developers plans to built approximately 360 new houses in Vilnius and its suburbs, which is a 67% increase compared to 2015. This is the best annual supply indicator since 2007, when nearly 490 new houses were supplied.
If compared the development of house projects with the most active time period in 2007, we can see certain distinct differences. Today, developers present to the market a completely different product that reflects the current realities: a smaller living area for a lower final price. While in 2007 the average total area of houses built in Vilnius region was 186 sqm, this year the average area is 111 sqm, which is the lowest indicator for the past 15 years that will hardly change in the foreseeable future.
Developers currently invest in the house projects of various size; the projects are dominated by row houses, i.e. attached houses with relatively small areas. While earlier a typical project consisted of detached houses and semi-detached houses connected by means of garages, today developers normally offer long aisles of attached row houses, which normally do not have indoor parking facilities. Parking spaces are normally provided outside or under sheds of houses. Yet the total area of houses decreases not only on the account of garages but also in terms of living area: it is now normal to design houses with a living area of approximately 80– 100 sqm, and sometimes you can even find row houses with an area under 60 sqm.
Developers want to satisfy buyers who wish to have their own home away from the city noise and closer to nature, with a minimum number of neighbours, a separate entrance and a plot of land. Attached houses with a smaller area enable satisfying these wishes at least to some extent and, what is most important, to provide housing for a considerably lower price. Buyers who prefer this type of houses are normally bound to not only accept a smaller living area but also a fairly small plot of land. Analysis of projects of Vilnius developers of 2016 shows that in most cases houses are built on plots of land with an area of 200 to 400 sqm.
In projects with a high construction density dominated by row houses, the area of plots of land can be 150–180 sqm, which means that the ownership and use of an own plot of land is implemented only formally if these projects do not create areas for common use (children playgrounds, sports grounds, etc.). The supply of detached or semi-detached houses with plots of land exceeding 600 sqm is very limited. Of the 19 house projects or stages to be completed in Vilnius this year, only 4 projects will offer houses with plots of land of a larger area (over 600 sqm).
Current housing development trends enable developers to offer their product to an increasingly large number of buyers. A smaller area of houses and plots of land means a lower acquisition price – a factor that remains an important criterion for buyers. Small (up to 100–120 sqm) houses without fit-out in Vilnius and its suburbs currently sell for EUR 80,000–120,000. Larger houses with an attractive location and partial finish are normally offered for EUR 140,000–170,000. If the pace of implementation of projects is considered, it becomes evident that developers have managed to adapt to the market needs and supply liquid products. To date, two thirds (66%) of the houses completed this year or to be completed by the end of the year in Vilnius and its suburbs have been either sold or booked.