Purchasers now only interested in housing at the market price
The Ober-Haus Lithuanian Apartment Price Index (OHBI) which tracks changes in apartment prices across the five biggest Lithuanian cities (Vilnius, Kaunas, Klaipėda, Šiauliai and Panevėžys) increased by 1.4% in October 2022 (a 2.2% increase was recorded in September 2022). In the last 12 months, the overall apartment purchase price level in these five cities has risen by 22.5% (with annual growth achieving 22.7% in September 2022).
In October 2022, apartment sales prices grew 1.7% with the average price per square metre in Lithuania’s capital reaching €2,546 (+42 €/m²). In the same month, Kaunas, Klaipėda, Šiauliai and Panevėžys experienced price increases of 1.3%, 1.2%, 0.2% and 0.3%, with the average price per square metre rising to €1,692 (+21 €/m²), €1,607 (+19 €/m²), €1,066 (+2 €/m²) and €1,054 (+3 €/m²) respectively.
Last year (October 2022 as compared with October 2021) apartment prices increased in all the bigger cities across the country: 25.5% in Vilnius, 19.6% in Kaunas, 18.5% in Klaipėda, 16.9% in Šiauliai and 17.1% in Panevėžys.
According to Raimondas Reginis, Research Manager for the Baltics at Ober-Haus, ‘One could say that the housing market has been in a suspended state during the second half this year. Potential homebuyers remain cautious and don’t rush their decision-making when it comes to buying a dwelling, whereas home sellers are trying to find a balance between their own expectations, and the real estate market price. In the environment of rapidly increasing housing prices, vendors often enter the market with prices higher than the current market price. In demanding a higher price, they expect the general level of housing prices to quickly catch up with the prices they have set, thereby hoping to have their real estate sell for the highest possible price. Earlier, in the context of the previously prevailing optimism and fast price growth, such expectations would actually turn out to be well-founded for the majority of sellers. But the purchasers’ optimism in the real estate market has faded in the second half of this year, which has reduced the market activity overall, and extended the whole deal process. The vendors who have to sell housing more quickly are therefore forced to reconsider the purchase prices offered and reduce their expectations, that no longer match the current reality. So, we are now seeing sellers gradually decrease the asking price of their property, although usually, even after the price correction, they still remain above the dominant price level in the market.
Meanwhile, the sellers who carry a realistic outlook on the current situation and offer housing at the market price might expect their housing to attract enough interest from potential buyers and be sold in a more usual period of time. The most recent apartment market data shows that the activity in the largest and the most important housing segment in the country, despite a slight reduction, has remained stable during the second half of this year. According to the data of the State Enterprise Centre of Registers, there were slightly more than 2,300 older construction apartments sold nationwide in October 2022, indicating that the reported sales volume has stayed practically the same as in July, August and September of this year. The general activity in the country’s secondary apartment market has dropped 15% (during the period from July to October 2022 as compared with July to October 2021), so vendors must objectively assess their expectations and adjust their sales price to at least reflect the market price level. We can see that the housing offered for sale at a price higher than the market price, currently generates little interest among purchasers’, concludes Reginis.