Monday, July 15, 2024

Reigniting Lithuania’s Housing Market: A Robust Half-Year Performance Amid Improved Affordability

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A Vibrant Half-Year Performance and Improved Affordability Reignite Lithuania’s Housing Market

Recent analysis by Citus, a pioneering figure in creative real estate projects development and placemaking, unveils a robust housing market in Lithuania, contradicting typical summer lulls. June witnessed 222 transactions in Vilnius’s primary housing market, contributing to a total of 668 in the second quarter. Although these figures reflect a regular pace, the cumulative half-year transactions stood at a fruitful 1,484, marking the most active initial six months since 2022.

Šarūnas Tarutis, Citus’s Head of Investment and Analysis, shared optimism, citing that despite the kickoff of the summer vacation season, the housing market’s resilience is notable. With wages on the rise, stable housing prices, and a decline in Euribor rates alongside bank margins, the landscape for potential buyers is increasingly favorable. Such conditions, paired with a noticeable boost in consumer confidence—a peak unseen since late 2019—indicate a promising horizon for market activity.

Noteworthy is the stability in apartment prices, with an average cost standing at EUR 3,342 per square meter by June’s end. This minimal growth reflects a market maintaining its balance amidst rising supply, which has seen a notable 28% increase over the half-year, tipping the scales at 5,520 new dwellings on offer.

The burgeoning demand, as Tarutis underscores, reveals an estimated 9,000 potential buyers in Vilnius alone, grounded in a detailed analysis that spans from 2017 to 2021. This backlog, predicted to spiral to an approximate 10,000 due to unmet demands, outlines an eager consumer base poised to encircle Vilnius’s Old Town in anticipation.

Conversely, the secondary market has plateaued, showcasing a marginal increase that hardly meets the swelling demand in the primary market. Citus’s projects, however, have demonstrated a commendable performance, with significant transactions both in Vilnius and other locales such as Kaunas and the coastal regions, reflecting diverse consumer enthusiasm across Lithuania.

In Kaunas, despite a perceived slowdown, the transaction tally in the year’s first half has eclipsed previous records, signaling a market that remains vibrant. Price stability is mirrored in this city, with a gentle upward trend observed. Meanwhile, supply encounters a slight dip, suggesting a recalibration within the market’s dynamics.

Klaipėda’s market, on the other hand, shows a remarkable resurgence in demand, matched with a slight price correction in the favor of buyers. The spike in supply, dominated by more affordable housing options, underscores an evolving landscape that caters to a wide array of preferences.

Tarutis accentuates the significance of Euribor’s reduction as a pivotal moment for improving affordability. Nevertheless, it is the soaring wages that have chiefly buoyed the Housing Affordability Index, enabling more individuals and families to entertain the prospect of homeownership. With affordability indices on a promising trajectory, Lithuania’s urban landscapes are becoming increasingly accessible to aspiring homeowners.

As affordability trends upward, the essence of stable pricing coupled with wage growth heralds a new era of accessibility in Lithuania’s housing market. Such dynamics fortify the foundation for a flourishing real estate sector, promising broadened horizons for prospective buyers across the nation.

Natalie Kimura
Natalie Kimurahttps://www.businessorbital.com/
Natalie Kimura is a business correspondent known for her in-depth interviews and feature articles. With a background in International Business and a passion for global economic affairs, Natalie has traveled extensively, providing her with a unique perspective on international trade and global market dynamics. She started her career in Tokyo, contributing to various financial journals, and later moved to London to expand her expertise in European markets. Natalie's expertise lies in international trade agreements, foreign investment patterns, and economic policy analysis.

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