Klaipėda is experiencing a short-term fever of buying new apartments and rising prices

Klaipėda is experiencing a short-term fever of buying new apartments and rising prices.

 

In June and July, the new residential housing market in Klaipėda was characterized by fantastic statistical growth. However, a closer analysis shows that such growth was not caused by the consistent development of the real estate market, but by several new projects offered to the market. In the conditions of a chronic shortage of cheaper housing in the port city, they were feverishly purchased, despite significantly increased prices.

 

“There is still relatively little construction going on in Klaipėda, especially of low-cost housing, so one or another larger project here has such a significant impact on the statistics that the market seems uneven and jumpy,” says Matas Macijauskas, a market analyst at Eika.

 

It is likely that in the fall, when several more large new housing projects begin to be sold, this fever of purchases and housing price increases should reach a critical point and then subside.

 

In June-July, real estate development companies offered buyers about 230 new apartments. Newly built housing in the port city was immediately purchased and reserved for purchase, 175 percent more than in April and May and 292 percent more than in 2006 during the same period.

 

This purchase boom in Klaipėda took place despite a sharp increase in the price of new construction housing. Back in the spring, prices for economy (up to LTL 6,000 per sq m) and mid-range (up to LTL 7,500 per sq m) housing in Klaipėda overtook the capital, but they continued to rise in June and July.

 

Housing prices in Klaipėda have increased so much that the weighted average price per sq. m. of economy-class apartments has risen to LTL 6,332, middle-class apartments – to LTL 7,606, and prestigious apartments – to LTL 9,845.

 

However, the increased supply has not satisfied the market’s appetite: the supply-demand ratio in the port city has fallen to 3.53 new apartments per buyer in the past two months. Meanwhile, in April and May it was more than twice as high, reaching 7.49 apartments per buyer, and in June-July of last year – a full 8.43 apartments.

 

By the way, even the poor summer housing selection in Klaipėda represents some progress: the lowest apartment selection rate here was in February and March 2007, when there were only 2.5 apartments per buyer.

 

For the first time this year, sales and reservations of economy-class apartments no longer accounted for the largest share of the market, although the cheapest housing is usually purchased the most. In the summer, the market was divided as follows: 30.7 percent of economy-class apartments were purchased and reserved for purchase, 48.1 percent of medium-class apartments, and 21.2 percent of prestigious apartments.

 

According to Matas Macijauskas, the above figures do not mean that Klaipėda residents are willing to buy only expensive apartments, quite the opposite – they should be understood from them that there is not enough cheap housing offered here. Therefore, Klaipėda’s potential remains unmeasured, because prices and conditions here continue to be dictated by real estate developers. This trend will remain unchanged until more residential housing objects appear on the market, which should happen in the fall.