Residential property sellers and buyers share similar positions today
The Ober-Haus Apartment Price Index (OHBI) in Lithuania, which records changes in apartment prices in five major Lithuanian cities (Vilnius, Kaunas, Klaipėda, Šiauliai and Panevėžys), increased by 2.2% in August 2022 (the growth in July 2022 was 2.6%). The apartment prices in the major cities of Lithuania have increased by 22.0% over the last 12 months (the annual growth in July 2022 was 22.3%).
In August 2022, apartment sales prices increased by 2.7% in the capital city, Vilnius, and the average price per square meter reached EUR 2.445 (+64 EUR/sqm). In Kaunas, Klaipėda, Šiauliai and Panevėžys, the apartment prices increased by 1.5%, 1.8%, 0.5% and 1.1% respectively and the average price per square metre increased to EUR 1,639 (+24 EUR/sqm), EUR 1,555 (+28 EUR/sqm), EUR 1,044 (+6 EUR/sqm) and EUR 1,037 (+12 EUR/sqm) respectively.
Annual growth (August 2022 compared to August 2021) in apartment sales prices was recorded in all major cities of the country: 25.4% – in Vilnius, 19.4% – in Kaunas, 16.6% – in Klaipėda, 16.2% – in Šiauliai and 16.9% – in Panevėžys.
“Despite lower expectations of the population and businesses concerning the country’s future economic situation, recent data of the residential property market do not yet show any signs of significant negative sentiments in the market. Although the number of new purchase agreements in the primary apartment market in major cities has fallen, the number of registered transactions remains relatively high. According to the State Enterprise Centre of Registers, almost 2,900 apartments were sold in Lithuania in August 2022 or 5% less than in August 2021, but the figure was the same as that in August 2020.
Of course, the inertia of the real estate market has a significant impact on official statistics. First and foremost, recent months have seen a sufficiently large number of transactions for the registration of newly-build apartments, however, these transactions were negotiated earlier, e.g. in 2020–2021. Even in the secondary market, it may take up to 1-2 months from the buyer’s decision to purchase a specific property to the registration of the final transaction. As a result, a significant increase in apartment sales prices, even in the context of a slowing and less optimistic market outlook, has been recorded. At present, the situation in the residential property market can be identified as sufficiently balanced, where the buyer and seller are in very similar negotiating positions. In the secondary market, the sellers still feel sufficiently strong, although not all buyers are willing to pay the price that does not meet their expectations. The negotiating positions of sellers may get significantly weaker only if the overall housing market activity stalls faster than we have seen so far. The sellers who wish to sell their homes quickly would have to compete in the market by offering lower prices than they have done so far. Looking at the economic development prospects of the country in the near future it seems that it will be increasingly difficult for the sellers of residential properties to convince buyers to pay record-high prices,” Raimondas Reginis, Head of Market Research for Baltic Countries at Ober-Haus, noted.