Insight
Tomas Žiaugra, Head of the Development Department at Eika:
In the second quarter of 2023, the primary housing market in Vilnius is pulsating at a similar pace of 200 apartments per month as at the beginning of the year. During the first half of 2023, 1,220 apartments were sold on the market, so a similar annual result to last year can be predicted, only without major fluctuations. Buyer activity and housing demand have not disappeared, but the decision-making period has sometimes been extended. In projects managed by Eika, we have cases where 2-3 months pass from the first visit to the object to the signed contract with the client. The increased opportunity to choose, negotiations with developers and banks allow buyers to receive particularly advantageous offers.
On the other hand, developers are also not increasing their turnover – during the first half of 2023, about 20 percent fewer new apartments were offered to the market than last year. The division of projects into smaller stages in order to manage risks due to increased borrowing costs and decreased demand is increasingly observed. During the quarter, about 520 new apartments in 8 projects were launched for sale. The number of vacant apartments on the market currently reaches 3,090 apartments, i.e. 9 percent more than at the beginning of the year. In addition, every third vacant apartment on the market is in the final stage of construction. It seems that developers are managing to find a consensus with clients regarding completed or nearing completion of construction, but unsold apartments, so their number on the market is not growing significantly. This is a good sign, which indicates that we should not expect creditors to squeeze and unfinished projects.
The annual growth in the price of new apartments in the 2nd quarter of 2023 continued to decline and reached 13.6 percent (after the 1st quarter, the annual growth was 18.5 percent). The overall average price grew by 0.3 percent during the quarter, i.e. the average market price increased from 3330 to 3340 EUR/sq m., but the situation in individual market segments differs radically. There were almost no changes in the middle-class segment – the price increased slightly by 0.3 percent during the quarter – from 3670 to 3680 EUR/sq m. Buyers in this segment, who made their purchases at the beginning of the year, were the first to start their vacations. Meanwhile, economy-class housing became cheaper for the second quarter in a row and the price decreased by 2.4 percent during the quarter – from 2890 to 2820 EUR/sq m. The situation in the luxury housing segment is the opposite – the price grew by 6.2 percent during the quarter. from 4690 to 4980 EUR/sq m. Due to the lack of supply, the launch of any new project in this segment has a significant impact on the price and attracts great interest from buyers.
It is clear that in 2023, buyers, with much wider options to choose from, are trying to do just that – the longer decision-making time and trying to get the best possible terms will cause more and more headaches for sellers. Developers, in turn, will have to find ways to help buyers make decisions as quickly as possible in order to make room in their warehouse for new projects to start.
Facts
- 578 apartments were sold in the second quarter of 2023. The result of the quarter is only 3 percent lower than in the second quarter of 2022 (598 apartments) and 10 percent lower than in the first quarter of 2023 (642 apartments).
- The most popular housing types in the second quarter of 2023 remained middle-class – 52 percent of apartments sold (300 apartments), economy-class apartments (254 apartments) accounted for 44 percent of sales, and only 4 percent of apartments sold during the quarter were luxury housing (24 apartments).
- During the quarter, the number of buyers of economy and prestige class housing increased slightly – by 1 percent (from 251 to 254 apartments) and 4 percent (from 23 to 24 apartments), respectively, while middle-class sales decreased by 18 percent during the quarter compared to the first quarter of 2023 (from 368 to 300 apartments sold).
- During the second quarter of 2023, the number of vacant apartments on the market remained almost unchanged and currently stands at 3,090 vacant apartments on the market, compared to 3,110 in the previous quarter.
- The annual change in supply is much higher – 27 percent. In July 2022, there were only 2,440 vacant apartments on the market, compared to 3,090 currently.
- During the quarter, the share of completed and under-construction apartments on the market increased from 31 percent to 33 percent (1,010 apartments), while the remaining 67 percent (2,080 apartments) of apartments are only visible in drawings and are in the midst of construction.
- During the year, the share of completed and ongoing projects in the market increased from 14 to 33 percent, with growth recorded in all four quarters of the year.
- During the quarter, the number of vacant apartments changed the most in the prestigious class segment – it increased by 21 percent (to 180 apartments), the number of vacant apartments in the middle class housing remained at 1,410 apartments, and the economy class decreased by 3 percent (to 1,500 apartments).
- During the second quarter of 2023, developers offered about 520 new apartments to the market, which is 38 percent less than in the previous quarter (840 new apartments).
- During the second quarter of 2023, the price of new apartments in Vilnius changed the most in the luxury segment – it increased by 6.2 percent due to the launch of a new project, in the medium segment the price grew slightly – by 0.3 percent, in the economy housing class the prices decreased by 2.4 percent. The price level currently reaches 2820 eur/sq m in the economy class, 3680 eur/sq m in the medium class and 4980 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 0.3 percent during the quarter: from 3,330 EUR/sq m to 3,340 EUR/sq m. The annual price growth from July 2022 is 13.6 percent.