Market activity bounces back to the 2019 level; prices are still on the rise
The Ober-Haus Lithuanian Apartment Price Index (OHBI), which records changes in apartment prices in five major Lithuanian cities (Vilnius, Kaunas, Klaipėda, Šiauliai and Panevėžys), went up in April 2022 by 1.6% (in March 2022, an increase of 0.8% was recorded). The overall price level of apartments in the major cities of Lithuania has increased by 21.4% over the last 12 months (in March 2022, the annual increase stood at 21.1%).
In April 2022, apartment sales prices in the capital city increased by 1.7% and reached 2,195 EUR/sqm (+37 EUR/sqm). The increase in Kaunas, Klaipėda, Šiauliai and Panevėžys, was 1.6%, 1.2%, 1.3% and 1.8% respectively and the average price of apartments was 1,530 EUR/sqm (+24 EUR/sqm), 1,446 EUR/sqm (+17 EUR/sqm), 981 EUR/sqm (+12 EUR/sqm) and 954 EUR/sqm (+16 EUR/sqm) respectively.
In April 2022, apartment prices in all major cities of the country rose year-over-year by 22.6% in Vilnius, 23.0% in Kaunas, 17.7% in Klaipėda, 17.2% in Šiauliai and 15.4% in Panevėžys.
“Compared to the indicators last year, the country’s housing market activity has over the past few months declined, but given the extremely tense geopolitical situation and challenges to the country’s economy, the overall activity level remains relatively high. The results in April show that the majority of potential home buyers respond calmly to global events and proceed with the property purchase. The sufficiently high activity of the housing market supports a further price increase in the country’s major cities.
According to the State Enterprise Centre of Registers, the total number of apartment sales in Lithuania in April 2022 was by 21% lower than in April 2021. Looking at the performance of the apartment segment in the past two months, the indicators have returned to the 2019 levels. Meanwhile, the increase in apartment sales prices has been recorded in all apartment segments in the major cities, but the increase in the prices of newly built apartments has been more prominent. For example, in April this year, prices of newly built apartments in Vilnius, Kaunas and Klaipėda increased 2-3 times faster than those of older apartments. The price increase of new apartments in the primary market is visible both in terms of the number of recorded transactions and the expectations of developers. Developers increase the prices of the apartments still available in the completed projects or projects in progress at a rate of 5-10% per month Meanwhile the prices of apartments in the planned projects are at least by one third higher than a year ago.
Serious challenges in the construction sector are forcing developers to radically review the pricing of home sales in the planned projects in order to make them cost-effective. However, the success of implementation of these projects will depend not only on the expectations of developers, but also on the capacities of buyers. It seems that the next half of the year will show if the majority of the buyers are willing to pay a much higher price for a new home than before. It is likely that the current and future economic challenges may reduce the potential of some of the buyers and encourage them consider the possibilities of buying older or new but less attractive residential properties,” Raimondas Reginis, Research Manager for the Baltics at Ober-Haus, said.