Steadily declining housing market activity increases the likelihood of sales price decline
2022-12-13
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), remained unchanged in November 2022 (the increase in October 2022 was 1.4%). The apartment prices in the major cities of Lithuania have increased by 20.4% over the last 12 months (the annual growth in October 2022 was 22.5%).
In November 2022, apartment sales prices decreased by 0.1% in Vilnius and Klaipėda, and the average prices per square meter were EUR 2,543 (-3 EUR/sqm) and EUR 1,606 (-1 EUR/sqm) respectively. In Kaunas, Šiauliai and Panevėžys, the apartment prices increased by 0.1%, 0.7% and 0.3% respectively and the average price per square metre were EUR 1,639 (+1 EUR/sqm), EUR 1,074 (+8 EUR/sqm), and EUR 1,057 (+3 EUR/sqm) respectively.
Apartment sales prices rose year-on-year in November 2022 in all major cities of the country: 23.1% – in Vilnius, 17.5% – in Kaunas, 16.6% – in Klaipėda, 16.1% – in Šiauliai and 16.6% – in Panevėžys.
“In November this year, activity in the apartment segment was low and the sales price increase essentially stalled. According to the State Enterprise Centre of Registers, in November 2022 around 1,900 older apartments were sold in Lithuania or 23% less than in November 2021. Historically, this is one of the poorest indicators of one month. The last time lower activity in this property segment was recorded was the first half of 2020 (beginning of the COVID-19 pandemic) and in 2012.
The decline in the housing market activity has significantly reduced the expectations of market participants regarding price increase in the short-term, therefore expectations for stable or negative price developments dominate in the market. The ongoing decline in the market activity intensifies pessimism in the market and there are no premises for a noticeable market recovery. As a result, at least in the next six months, some real negative price changes may be recorded, where apartments will sell for less than they did before. The price changes in November 2022 show that the period of rapid price growth is over and, after a longer break, small negative changes in apartment sales prices have been recorded in certain regions of the country. However, in terms of price development, the housing market has not yet entered a downturn phase, which is characterized by a consistent decline in prices across all housing segments in all regions of the country,” Raimondas Reginis, Head of Market Research for Baltic Countries at Ober-Haus, noted.