During the first 9 months of 2017, almost 2,900 new-build apartments were sold in the primary housing market in Vilnius, or 10 percent less than during the first 9 months of 2016. The largest number of sales was of middle-class housing, and the price per square meter increased by 2.4 percent over the year..
The unusually active summer months of 2016 raised expectations in the market that sales would be just as active this year. However, according to EIKA Development Director Martynas Žibūda, this year we have returned to a quiet summer in housing sales. “In our assessment, a 10 percent market correction is a return to the normal seasonal cycle of sales, when sales slow down in the summer, and recover again in the fall. In addition, for three years in a row we have observed an annual 20 percent market growth. It is obvious that a healthy correction could be expected in the market,” M. Žibūda considers.
Future changes in the new housing market may be determined by the rapidly growing supply. In the third quarter of this year alone, the market was supplemented by almost 1,300 new apartments in various projects, mostly in the middle class (about 900 apartments). “Assessing the market, we notice that by the end of the year we can approach 5,000 vacant apartments on the market. Having started the year with 3,600 vacant apartments, we currently record 4,130, but we already know about 1,000 apartments under construction that have not reached the stage of official sales. The changing trend is indicated not only by the stock of unsold housing, but also by its completion structure: for example, at the beginning of the year there were only 470 completed unsold apartments, and now we see 840 of them, i.e. 80 percent more than 9 months ago,” – the representative of EIKA analyzes market trends.
However, buyers are still most active in buying housing in the initial stage of the project: if last year about half – 48 percent – of the apartments in buildings under construction were sold, this year this indicator has increased to 63 percent. “This is most likely due to two reasons: the first – as many as 70 percent. of all unsold apartments are in the initial stage of multi-apartment buildings under construction, and the second speaks of the good value of new projects, an acceptable value-quality ratio for buyers, which encourages them not to wait until the project is completed,” – considers M. Žibūda.
Currently, the average price per square meter in the primary housing market of Vilnius is 1776 eur/sq m, i.e. 2.4 percent higher than a year ago. According to M. Žibūda, it is predicted that prices will remain at a similar level. “We are already noticing in the market that real estate developers are increasing their competitiveness by providing special discounts or organizing various marketing campaigns. However, so far these offers do not have a significant impact on the overall price trend. If a real estate developer sells 5 apartments out of 100 apartments with a special discount, this is not an indication to the market that the price is falling,” says M. Žibūda. According to him, the average housing price would be more affected by the increased supply of affordable housing, but at least in the near future we do not see a similar scenario.
During the first 9 months of 2017, the most popular type of housing was middle-class housing – 1,845 apartments were sold. Economy housing sold – 1,762, and prestige housing – 279 apartments. “Sales of prestige housing decreased the most during the year, but there is a significant shortage of supply in this segment, with only 70 new apartments offered during the quarter,” says an EIKA representative.
About the EIKA group of companies
Founded in 1992, EIKA is one of the largest real estate development and construction groups in Lithuania, successfully developing residential, commercial, public and other building projects. The company has already built almost 4,000 apartments and 320 thousand square meters of buildings. EIKA has been awarded many times as the best real estate developer in Lithuania, the company’s projects “Santariškių namai”, Basanavičiaus 9A and “Eika namai Pilaitė” have become the best in Lithuania.