Insight
EIKA Development Director Martynas Žibūda:
“In 2019, new apartments were sold in Vilnius for EUR 0.56 billion, or 49 percent more than in 2018, when they were sold for approximately EUR 380 million. As much as 68 percent of this amount last year was allocated to the purchase of more expensive housing: prestigious and middle-class apartments were purchased for approximately EUR 100 and EUR 285 million, respectively, while economy-class apartments were purchased for EUR 177 million.”
In terms of the number of apartments sold, an all-time record was reached last year, when 5,646 new apartments were sold in Vilnius. This is 42 percent more than in 2018 (3,986 apartments) and 22 percent more than in the record year of 2007 (4,610 apartments).
Analyzing Eika apartment transactions over the past few years, we do not see any fundamental changes in the financing structure of transactions: buyer activity is not determined by greater indebtedness to banks, but by increasing incomes of residents, the growing number of residents, workers, and tourists in Vilnius.
More expensive housing, located as close to the city center as possible, was last year considered the safest investment for accumulated savings. Here, investors are the largest group of Eika customers, having completed about 37 percent of all transactions – in as many as 4 out of 5 cases they purchased housing with their own funds. Borrowed funds dominated in other customers’ transactions, but the number of customers itself increased proportionally in all buyer categories: 24 percent of apartments were purchased by couples without children, 21 percent by single people, and about 14 percent by families.
In 2019, not only home buyers but also developers were record-breakingly active. As many as 4,930 new apartments were offered to the market, which is 9 percent more than in 2018, when construction of 4,520 apartments began. This is the highest supply recorded since 2008. However, the greater activity of developers led to a 15 percent decrease in the number of unsold apartments over the year. Currently, it stands at 3,913 vacant apartments. Only 36 percent of this stock consists of completed and under-construction apartments, while 2 out of 3 apartments for sale are in the early stages of construction.
Supply adequate to demand led to housing prices rising more moderately than average incomes or mortgage interest rates. The overall average price of new housing in Vilnius grew by 5.3 percent: from 1965 EUR/sq m. last year to 2070 EUR/sq m. at the beginning of this year. It seems that the growth in construction costs and greater activity of buyers than developers had the greatest impact on the sale price of cheaper housing.
“In terms of expectations, it would be difficult to expect a more successful year than the previous ones, but the market should remain very active and competitive in any case. Unless there are any geopolitical events that affect the expectations of the population, unless there are dramatic changes in the principles of financing of companies and the population and the regulation of state land, we expect similar healthy market indicators in 2020.”
Facts
- In 2019, new apartments were sold in Vilnius for 560 million euros, i.e. 49 percent more than in 2018, when assets for 380 million euros were sold, and even 58 percent more than the previously record sales volume in 2016.
- In 2019, as many as 5,646 apartments were sold in the primary housing market of Vilnius, which is 42 percent more than in 2018 (3,986 apartments).
- The largest share of transactions was made up of middle-class sales – 50 percent of transactions, followed closely by the economy class – 41 percent of transactions, and 9 percent of sales were in the luxury housing segment.
- The number of middle-class housing buyers also grew the most during the year – by as much as 53 percent: 2,810 apartments in 2019 compared to 1,836 apartments in 2018. Economy and prestige class sales grew by 35 and 20 percent, respectively, during the year compared to 2018 to 2,301 and 535 apartments.
- During 2019, the amount of unsold housing decreased by 15.5 percent and currently stands at 3,913 vacant apartments.
- Only 36 percent of this warehouse consists of completed and under construction apartments, while 2 out of 3 apartments for sale, or 64 percent, are still in the early stages of construction.
- The largest decrease in unsold apartments was recorded in the luxury segment, where the number of available apartments decreased by 21 percent over the year, in the economy segment – by 19 percent, and in the most popular middle class, the trend supply decreased by 11 percent.
- In 2019, record activity among real estate developers was recorded – as many as 4,930 new apartments were offered to the market, i.e. 9 percent more than in 2018, when construction and sales of 4,520 apartments began. This is the highest supply recorded since 2008.
- In 2019, the price of new apartments in Vilnius grew the most in the economy segment – by as much as 10.6 percent, in the average segment by 6.2 percent, and in the luxury segment it even decreased by 0.4 percent. The price level currently reaches 1,535 EUR/sq m. in the economy segment, 2,115 EUR/sq m. in the average segment, and 3,124 EUR/sq m. in the prestigious segment.
- Due to the aforementioned price changes and the reduced share of economy-class housing in the supply, the total average price of new housing in Vilnius increased by 5.3 percent: from 1965 EUR/sq m. last year to 2070 EUR/sq m. at the beginning of this year.
- EIKA’s buyer analysis showed that investors remain the largest buyer segment, accounting for about 30 percent of transactions in 2019. Accordingly, couples without children accounted for 29 percent of transactions, singles – 18 percent, families – 13 percent, parents buying for children – 5 percent, children buying for parents – 2 percent, other (companies, etc.) – 5 percent.
- The aforementioned study shows that investors purchased mid-range or luxury housing in as many as 85 percent of cases, paying for it with their own funds in 81 percent of cases.