Prices grew at a double-digit rate
According to Ober-Haus calculations, the total level of apartment prices in Lithuanian cities has grown by 20.8% in the last 12 months, according to October data. Over the year (October 2021, compared to October 2020), apartment prices in metropolitan areas grew at a double-digit rate: in Vilnius – 22.0 per cent, in Kaunas – 20.2 per cent, in Klaipėda – 18.0 per cent, in Šiauliai – 19 per cent. 3 percent and in Panevėžys – 20.3 percent.
Ober-Haus Market Research Manager for the Baltics Raimondas Reginis says that Lithuania NT rinka continues to be surprised not only by the quantities of apartments sold, but also by the value of transactions: increasingly expensive assets are being acquired.
“The country’s housing market continues to amaze us and it is becoming difficult to assess where its limits are. The continuing interest in apartments continues to increase their sales prices, so in October of this year we recorded a solid increase in prices in the country’s cities. In Vilnius, where apartment sales prices continue to storm to new heights, old construction apartments In the last twelve months, prices have already risen by 19.7 per cent and new construction by 24.8 per cent, ”says R. Reginis.
Raimondas Reginis
–
As the prices of newly built apartments become more expensive, the residents of big cities start looking for housing in the secondary real estate market – they choose an apartment that already had a landlord or even several, do not cut into Soviet construction property. However, the growing demand for older construction real estate will undoubtedly lead to an increase in house prices in this segment as well. It is true that it is not so constant and a bit more modest here: according to the data of the 1Partner LT housing price index 1PI, the total level of apartment prices in the secondary market in Vilnius increased by 18.1% during the 10 months of this year. (265 Eur / sq. M) to 1734 Eur / sq. M. m. In Kaunas, the average rise in apartment prices reached 23.1 percent. (224 Eur / sq. M) to 1192 Eur / sq. M. m. 17.4 percent was recorded in Klaipeda. price increase (177 Eur / sq. m) to 1192 Eur / sq. m. m.
Only in October, the average apartment price in Vilnius increased by 1.2 percent. (20 Eur / sq. M), in Kaunas – 0.9 percent. (11 Eur / sq. M), in Klaipėda – 2.7 percent. (31 Eur / sq. M). However, it should be remembered that in September, according to 1Partner LT’s calculations, the average price of apartments in the secondary market in Vilnius increased by only 0.3 percent. (5 Eur / sq. M), and this is not the case in all districts: in some parts of Vilnius prices have fallen (in the southern part of the city, as well as in Lazdynai, Justiniškės, Viršuliškės, etc.). In Kaunas, apartment prices in the secondary market also decreased by 0.3 percent. (4 Eur / sq. M), in Klaipėda – 0.4 percent. (5 Eur / sq. M).
Buyers are also noticing price changes in the secondary real estate market. Tomas Delfi Būstas, who is currently looking for an apartment in an old apartment building in Vilnius, said that he could not believe the growing expectations of sellers when he visited the real estate advertisement portals every day.
“I look at the ads every day and see the prices go up fast. Some apartments are in very poor condition, the question of whether the bank would give a loan to buy such an apartment, but the seller asks for almost 80 thousand. euros. Two-room collapsed apartment – 80 thousand. euros? Do we really believe that such prices are adequate? It seems that people no longer feel the boundaries, ”says Tom.
According to the man, he does not intend to take part in this price race and will wait until the sellers of the house “come back to mind”.
–
Every salesperson wants to make money
Thus, apartment prices in the secondary market are not stable. Real estate analyst Arnoldas Antanavičius explains that several factors can lead to such changes. First of all, real purchase and sale transactions in the secondary real estate market are included in the statistics a little later, therefore the real values of transactions are visible after some time. Second, not all apartments for sale immediately find their buyer.
“Sellers sometimes tend to wait for a buyer who will pay more, so in one month there may be fewer transactions, in another – more, which can lead to monthly price fluctuations. It may be that one month prices fall and another month rises, ”says the real estate expert.
Arnoldas Antanavičius
–
However, according to the interlocutor, the general trend of price changes shows that apartment prices in the secondary market are rising, although there is a slight increase.
“Currently, there may not be as many transactions and the volume of sales as at the beginning of the year, sales have stabilized at the long-term average, and this still allows the market to be liquid. But sellers with each object for sale usually try to get a slightly higher price than it was, and buyers pay those amounts, ”says A. Antanavičius.
No price changes are forecast for the next few months
The real estate analyst explains the fact that Lithuanians are buying apartments despite their rising prices that the financial situation of the population is good and still improving. However, the growing number of housing loans may be somewhat halted by the new requirements of the Bank of Lithuania, which will come into force next year: after assessing that the housing market is heating up and the volume of lending for house purchase is increasing, the institution has decided to increase to 30%. increase the minimum down payment requirement for second and subsequent home loans. The exemption will only apply if the balance of each previous loan is less than 50%. the value of the housing purchased with that loan. New additions to the Responsible Lending Regulations will enter into force in 2022. February 1
“Wages are rising, people are willing to borrow money from banks to buy housing. The issuance of loans may be slightly constrained by the Bank of Lithuania’s planned measures from February next year, which may reduce the demand for speculative investors who bought second, third or second-hand housing from borrowed money, which may cool demand a little, real estate price adjustments could also take place, but by February most of these buyers are likely to rush to “shop”.
–
“People can rush to ‘shop’.” So so far I see no signs that the current situation could change. Unless quarantine is introduced, but people already have experience that quarantine is not so terrible for the real estate market. Thus, it seems that this situation will continue in the next few months, and in the spring it will be necessary to see how the tightening of the Bank of Lithuania will work, ”says A. Antanavičius.
The value of an apartment for sale is a subjective assessment
Today, real estate analysts tend to evaluate the prices of apartments in big cities, especially in Vilnius, with restraint. According to him, the value of an apartment that has already been owned by the owners of an old or newer construction is a subjective opinion of every buyer and seller.
“First of all, determining whether a price is logical or not is a very subjective valuation, and even property appraisers use a comparative method when valuing assets, which is actually a market look at the prices at which similar assets were transacted. Hence, the property is worth as much as someone was willing to pay for it. And here we always have a discussion, because for some it seems that the price is normal, for others – that it is too high, ”explains A. Antanavičius.
–
On the other hand, the interlocutor recalls that in order to assess the sustainability of the real estate market, the indicator of the ratio of housing prices to the income of the population should be remembered: how many years an average family would have to work in order to acquire an average home.
“In Lithuania, that indicator has always been one of the worst in the EU and has not been very favorable for home buyers. But it is not possible to rely solely on this indicator and say that prices are inadequate, because if there are buyers who buy, then the price level is maintained. But there is always a risk that the wider the gap between house prices and people’s incomes, the more unsustainable the price, the more risks there are. For example, when unfavorable factors occur, it can be quite difficult for people to maintain housing, pay a loan for that higher amount, and so on. These are risks that may look back on themselves, ”explains A. Antanavičius.
Associative photo
© DELFI / Josvydas Elinskas
–
Head of the Ober-Haus Old Town Office Marius Čiulada also emphasizes that rising prices in both the primary and secondary housing markets are starting to cause concern when apartment prices are no longer commensurate with buyers’ affordability. True, he emphasizes that changes in the prices of old housing in the secondary market are influenced not only by new price adjustments for construction apartments, but also by the ability of sellers themselves to objectively assess the price of the property sold. The real estate expert goes on to say that if the owner of the property starts selling it himself, he sets the price by looking at the same real estate ads on portals, often called “sellers’ expectations portals”, and sets a price several thousand higher if negotiated with the buyer. This is not a very good practice, it encourages real estate prices to rise. However, according to Ciulada, there are sellers who are in a hurry to sell the property in good condition.
“Sometimes it happens that a private seller, selling himself without an intermediary, is happy to have sold the apartment in a day, but maybe there is a mistake here and it is likely that he would have sold that property in two weeks, only at a higher price. But he trusted in his own strength and sold very successfully and very quickly, “comments the interlocutor.
MArius Čiulada
–
Price growth must slow down
Chulada is also reluctant to share good predictions. According to him, Real estate prices in the secondary market continues to rise. Asked if they have already reached the peak, the interlocutor says the rise cannot be eternal.
“The carpet cannot be permanent, unrestrained or unstoppable. People still ever start asking themselves and each other if this is sustainable and real, maybe they still need to rent housing, maybe they need to save and wait for prices to return to normal. In addition, the heating season has begun and a seller who sells a property in the summer may ask for a more optimistic price because it is not pressured by heating costs or time. And in the winter for a few months and there may come a heating bill such that it might be better to lower the sale or rental price. In other words, the pressure on the seller increases in the winter and the mood of buyers in the cold season is also worse than in the winter. We see that in the summer the buyers are more positive, and with the weather getting worse and the heating season approaching, the mood is deteriorating, which really determines the financial decisions, ”M. Čiulada assures.
–
It is strictly forbidden to use the information published by DELFI on other websites, in the media or elsewhere, or to distribute our material in any form without consent, and if consent has been obtained, DELFI must be cited as the source.
