'In February, a record low activity in the apartment sector of the country's capital and, for the first time after a longer period of time, a symbolic fall in sales prices were recorded. Despite slightly pessimistic moods prevailing early in the year in the housing market of the major cities of Lithuania, in the first six months of the year sales and prices shot up yet again. Of course, very different trends can be observed in different regions or cities of the country – from decreasing to rising indicators in the market activity and diverse price changes,' Raimondas Reginis, Ober-Haus Research Manager for the Baltics, said.
According to the State Enterprise Centre of Registers, 0.2% fewer purchase and sales transactions for apartments and 0.3% fewer transactions for private homes were concluded in the first half of 2018 than were concluded in the same period in 2017. In the first half of this year, on average 2,668 transactions for apartments and 820 transactions for houses were concluded per month. May saw the largest number of transactions totalling 4,148. This is the second best performance in the month in the Lithuanian housing transaction market since 2007. A larger figure was recorded in September 2016 (4,205).
Currently, sustainability of new housing developments in the capital city has been most debated, as since Q3 2017 the realization curve for newly constructed apartments (first-time sold and reserved new apartments in multi-apartment buildings that have been completed or are being constructed) has moved downward and over the past four quarters has remained stable with an average of 800–900 apartments sold per quarter. According to Ober-Haus, in the first half of 2018, 1,789 new apartments in multi-apartment buildings that have been completed or are being constructed were purchased or reserved in Vilnius directly from builders. This is 5% more than in the second half of 2017, but 17% less than in the first half of 2017.
The Ober-Haus estimates reflect the transactions which are immediately officially registered (on the purchase of the property in a completed building) and the transactions based on the preliminary contracts, which will be registered with the State Enterprise Centre of Registers in the future, after the completion of the multi-apartment buildings. Meanwhile the State Enterprise Centre of Registers in its statistics for apartment purchase and sale transactions records only final transactions, which shows the opposite situation – the increasing number of transactions for new apartments reaching record heights in Q2 2018 when the acquisition of 1,268 new apartments was recorded in the city of Vilnius (best quarterly result since 2007). Based on the data of the State Enterprise Centre of Registers, the result of the first half of 2018 is also the best since 2007–2008. This shows that currently finalised and recorded transactions for new apartments were recorded and figured in the Ober-Haus estimates back in 2016–2017, i.e. at the time when the preliminary purchase and sale contracts for these apartments were concluded. Thus the housing market is currently absorbing almost a record amount of borrowed or own cash over the past decade.
At the same time, slightly negative trends in the new apartment sales prices in Vilnius have been observed over the past six months. If the prices for old apartments in the capital city in the first half of 2018 increased by 1.6%, so the prices for new apartments fell by 0.3%.
'Although this is a slight decrease in apartment prices, such trend has been recorded for the first time over the past three years. Last time the price decrease trend (for both new and old apartments) was recorded in Vilnius in the second half of 2014, when the then geopolitical situation had a negative impact on both the country's business and people,' Mr Reginis said. Current slight downward move in the price curve of newly constructed properties can be linked to a really significant and sufficient supply of new housing, which prevents a considerable portion of developers from increasing their sales prices as easily as they did before and they even have to compete for more attractive prices with other competitors.
30 multi-apartment building projects to be implemented in Kaunas in 2018
The developers have also gained speed in the second largest city in the country. This is in particular visible in the development of multi-apartment buildings over the past few years. According to Ober-Haus, a total of 633 apartments were built in multi-apartment buildings in 2017 in Kaunas or 92% more than in 2016. In 2018, developers in Kaunas plan to complete up to 1,100 new apartments in multi-apartment buildings and thus repeat record development indicators recorded a decade ago. This year alone, apartments in 30 different projects will be offered to buyers. For example, in 2008, 1,070 apartments in 15 different multi-apartment building projects have been built for sale. This means that due to the abundance of different projects, customers this year will have even greater choice than 10 years ago.