EIKA Development Manager Martynas Žibūda:
New housing sales stabilized in the third quarter of this year and reached the average of the last three years: 1,372 apartments were sold, which is 12 percent less than in the second quarter of this year (1,561 apartments). However, it is already clear that this year will be the most successful in history, because in the first 9 months of this year, almost as many apartments were purchased in Vilnius as in the entire record-breaking year of 2019: 5,597 compared to 5,660.
The stable transaction market hides the storms in real estate housing prices: average housing prices shot up by as much as 6.6 percent during the quarter, and over the year they have already grown by double digits – by 17.5 percent. The main reason for this process is insufficient housing supply and rapidly growing construction costs. The inertial process of real estate project development and the constantly complicated and expensive process of coordinating the real estate project with state institutions, mostly Vilnius City Municipality, do not allow offering buyers a sufficient number of apartments. This supply-demand imbalance determines the rapidly growing housing prices and the situation when only 7 percent. of the apartments sold were completed (95 out of 1372).
A similar situation has arisen when looking at the stock of unsold apartments, which has remained at a similar level for the second quarter in a row: only 140 apartments out of 2,900 have been completed. This means that the vast majority of transactions take place without the need to leave home, as you can only view project visualizations on your computer – a relatively practical circumstance in times when less social contact is sought.
Having reached record highs, housing prices should not continue to rise in the coming years, but at the same time, it would be difficult to see opportunities to lower them due to rapidly growing energy resources, material costs, and rising labor costs, which are determined by more generous social benefits and limited access to workers from third countries.
Facts
- In the third quarter of 2021, 1,372 apartments were sold/reserved in the primary housing market of Vilnius, which is 12 percent less than in the second quarter of 2021 (1,561 apartments) and almost 2 percent less than in the third quarter of last year (1,406 apartments).
- The result of the first 9 months of 2021 is 5,597 apartments sold, which is just 1 percent or 63 apartments less sales than were sold throughout the entire year in the record-breaking year of 2019 in Vilnius (5,660 apartments).
- Economy-class apartment sales during the quarter accounted for 45 percent, middle-class – 49 percent of transactions, and only 6 percent of sales were in the luxury housing segment.
- During the quarter, the number of buyers of prestigious housing decreased the most – by as much as 67 percent: only 77 apartments were sold in the third quarter of 2021 compared to 230 apartments in the second quarter of 2021. Economy class sales decreased by 17 percent during the quarter compared to the second quarter of 2021. (from 751 to 623), while apartments in the middle class segment were the most popular – sales increased by as much as 16 percent (from 580 to 672).
- During the third quarter of 2021, the number of vacant apartments on the market changed slightly – it increased by 2 percent and currently reaches just 2,900 vacant apartments, but since the beginning of the year, the choice of options for buyers has decreased by almost 18 percent.
- Only 12 percent of this warehouse consists of completed and under construction apartments, while the remaining 88 percent, or 9 out of 10 apartments for sale, are still in the midst of construction and are visible only on paper.
- During the quarter, the number of vacant apartments decreased the most in the economy and prestige class segments, where the number of vacant apartments decreased by as much as 17 percent and 6 percent, respectively, while the supply of housing in the middle class segment increased by almost a third.
- In the third quarter of 2021, 1,424 new apartments were offered to the market, which is almost a hundred apartments more than in the second quarter of 2021, when the construction and sales of 1,328 apartments began.
- During the third quarter of 2021, the price of new apartments in Vilnius grew the most in the luxury segment – as much as 8.5 percent, while prices in the economy and medium segments grew equally – 3.4 percent each. The price level currently reaches 2020 EUR/sq m in the economy class, 2680 EUR/sq m in the medium class, and 3710 EUR/sq m in the prestigious class.
- Due to the above-mentioned price changes, the total average price of new housing in Vilnius increased by 6.6 percent during the quarter: from 2,359 EUR/sq m in July to 2,514 EUR/sq m in early October 2021. The total price grew more than in the economy and middle-class segments, as more new middle-class apartments at higher prices added to the supply during that period.