Insight
EIKA Development Project Manager Tomas Žiaugra: “Real estate developers, guided by the results of 2016 and the market growth rates of the last 5 years, offered a record number of new apartments in 2017, which exceeded demand. Sales of new housing from the record highs of 2016, which were raised mainly by investor-lessors, are returning to a real and healthy rhythm. Over the last three quarters of 2017, sales volumes have remained almost unchanged – almost 900 apartments were sold each. Although less than expected, the 13% increase in supply slowed down the annual price growth, which decreased by half to 3.5%. The increased housing options extended the duration of the sales process, which almost doubled the number of new apartments in already built houses. With demand remaining at a similar level, smaller real estate developers will increasingly begin to feel the pressure due to frozen capital, so it is likely that in 2018 In the middle of 2018, price growth may slow down even more, because it will be too much of a financial burden for some real estate developers to keep unsold apartments. However, this will not become a mass phenomenon, because even a third of the apartment supply on the market is concentrated in the hands of the 5 largest real estate developers, and about 15 developers control two thirds of the supply on the market. All of these real estate developers are not one-dayers in terms of both projects and capital – they have accumulated enough experience to survive short-term market fluctuations. It is realistic that we will definitely not avoid price corrections in some projects, especially in those that do not have a qualitative competitive advantage, but this will certainly not become a mass phenomenon in the market. In any case, in 2018, the home buyer will win both because he will have a wider choice and because he will be able to choose from a larger number of already built apartments, and bargain hunters will also not be left without a pick.”
Facts
- In 2017, 3,780 apartments were sold in the primary new housing market of Vilnius, which is 10 percent less than in 2016, but 9 percent more than in 2015.
- The highest buyer activity was recorded in the middle class (48 percent of market sales), the economy class activity was not far behind – 45 percent of apartments sold, and only 7 percent of sales were in the luxury segment.
- The number of luxury home buyers decreased the most during the year – 24 percent. This was influenced by the lack of attractive housing and new projects, as the majority of prestigious projects on the market were launched in 2016. Middle-class sales decreased by 9 percent during the year, and economy – by 8 percent.
- In 2017, the supply of new housing increased by 13 percent and currently amounts to 4,100 apartments. The largest increase in available apartments was recorded in the economy class, where the number of available apartments increased by as much as 44 percent, in the average class by only 2 percent, and in the prestigious class, the supply decreased by 36 percent.
- The number of completed apartments on the market has almost doubled over the year, to 1,000 apartments.
- In 2017, record activity among real estate developers was recorded – about 4,260 new apartments were offered to the market, i.e. 7 percent more than in 2016, when construction and sales of 3,970 apartments began, and the highest number since the 2008 crisis.
- In 2017, the total price of new apartments in Vilnius increased by 3.5 percent. The growth was significantly lower than in 2016, when the price of new housing increased by almost 8 percent over the year.