Insight
EIKA Development Manager Martynas Žibūda:
After a record first quarter of the year, when new home buyers in Vilnius purchased as many as 2,664 apartments, this indicator fell by 40 percent in the second quarter of 2021 and reached 1,561 apartments. The total result for 6 months is still the highest in history – 4,225 apartments sold in half a year – and 2.7 times higher than during the same period last year or 1.5 times higher than in 2019. before the quarantine.
This year, home buyers were most active in March, when they purchased more than 1,000 apartments, while only 250 transactions were recorded in June. It seems that the unexpected spring storm of buyers has been replaced by a summer calm in the market. This was influenced by housing prices that increased three times faster than usual in half a year and a record decrease in the choice of available apartments.
During the first months of this year, developers’ housing stocks were swept away: currently, there are 2,850 unsold apartments left in Vilnius – this is the lowest number since 2014. Of these, only 142 apartments are fully completed, all the others are in the initial or middle stage of construction, while a year ago there were almost 1,000 completed apartments.
Developers have been quenching the pent-up demand not only with new supply, but also by increasing the prices of existing housing, which rose by as much as 4 percent during the quarter – a figure that has so far been more commonly used to describe the annual price index. In certain housing segments, for example, in the middle class, this growth reaches double digits.
It seems that in this way the developers managed to contribute to the stabilization of the market situation: the increased housing prices and the reduced choice of housing for a while drove Vilnius home buyers to other parts of Lithuania and the world to vacation and enjoy the end of the quarantine. Developers, in turn, are calculating the threateningly growing construction costs and assessing their capabilities to fulfill the promises made to buyers. Summer, let’s hope, will be the time when economic processes will normalize not only in the global, but also in the Vilnius housing market, the supply and demand ratio will stabilize and it will be possible to talk about more even market development rates.
Facts
• In the second quarter of 2021, 1,561 apartments were sold/reserved in the primary housing market of Vilnius, which is as much as 41 percent less than the record-breaking first quarter of 2021 (2,664 apartments), but almost 4 times more than in the second quarter of last year (411 apartments).
• The result of the first half of 2021 is 4,225 apartments sold. Until 2018, the market did not generate so many sales per year, and last year’s annual sales were only 10 percent higher than the number of apartments sold in the first half of this year.
• Economy class apartment sales during the quarter accounted for 48 percent, middle class – 37 percent of transactions, and 15 percent of sales were in the luxury housing segment.
• The number of middle-class housing buyers decreased the most during the quarter – by as much as 52 percent: 751 apartments were sold in Q2 2021 compared to 1,215 apartments in Q1 2021. Economy-class sales decreased by 38 percent during the quarter compared to Q1 2021 (from 1,206 to 751), while sales in the luxury segment changed little – decreased by 5 percent (from 243 to 230).
• During the second quarter of 2021, the number of vacant apartments on the market decreased by as much as 12 percent and currently stands at just 2,850 vacant apartments. A lower number of vacant apartments on the market was recorded only in 2014.
• Only 12 percent of this warehouse consists of completed and nearing completion apartments, while the remaining 88 percent, or 9 out of 10 apartments for sale, are still in the midst of construction or at the beginning.
• During the quarter, the number of vacant apartments decreased the most in the luxury and middle-class segments, where the number of vacant apartments decreased by as much as 34 percent and 26 percent, respectively, while the supply of housing in the economy segment even increased slightly – by about 10 percent.
• In the second quarter of 2021, 1,328 new apartments were offered to the market, which is almost a third less than in the first quarter of 2021, when construction and sales of as many as 2,100 apartments began.
• In the second quarter of 2021, the price of new apartments in Vilnius grew the most in the medium segment – by as much as 10.4 percent, in the economy segment by 6.8 percent, and in the luxury segment by 7.1 percent. The price level currently reaches 1960 EUR/sq m in the economy segment, 2590 EUR/sq m in the medium segment, and 3420 EUR/sq m in the prestige segment.
• Due to the above-mentioned price changes, the overall average price of new housing in Vilnius increased by 4.0 percent during the quarter: from 2,269 EUR/sq m in April to 2,359 EUR/sq m at the end of June 2021. The overall price did not increase as much as in individual segments, as in the meantime a number of new economy-class apartments at a lower price were added to the supply.