This post was automatically translated into English
Market analysts call the 37.6 percent growth recorded in the primary new construction housing market in Vilnius in June and July (compared to April and May, when the number of apartments purchased and reserved for purchase in the city center fell by 36 percent) a “swell” and associate it with the market leveling off, rather than its rise.
Market analysts call the 37.6 percent growth recorded in the primary new construction housing market in Vilnius in June and July (compared to April and May, when the number of apartments purchased and reserved for purchase in the city center fell by 36 percent) a “swell” and associate it with the market leveling off, rather than its rise.
The sales of new-build apartments, which slowed down at the end of spring and predicted even greater stagnation during the summer holidays, unexpectedly recovered in July and June: the number of new-build apartments purchased and reserved for purchase was as much as 140 percent more than during the same period in 2006.
In the primary market (where real estate development companies sell housing themselves), sales in the capital, as well as in Panevėžys, particularly accelerated in July. It is believed that this process may have been influenced by Lithuanians working abroad who returned to Lithuania and bought apartments in the capital. Their investments earned abroad may have offset the decrease in demand from local consumers.
The most popular product, of course, remained affordable housing, which this year accounted for about 80 percent of the total turnover of new construction apartments (in February-March – 80.2 percent, in April-May – 82.8 percent, and in June-July – 79.9 percent).
The market was not ready for such new demand, because last summer there was a lull in purchases on the market, and Lithuanian citizens working abroad did not yet have such a pronounced influence on it.
The supply analysis shows that in June and July, 6.6 percent fewer apartments were offered for purchase than in May this year and 19 percent fewer than in July 2006.
“Real estate developers in the capital are not putting enough housing on the market to keep supply stable. This trend is particularly noticeable in the economy class (up to LTL 6,000 per sq m). Here, supply has already decreased by a full quarter since the beginning of the year — to 1,500 apartment units currently for sale,” explains Matas Macijauskas, an analyst at the real estate development company Eika.
For example, in August and September last year, a statistical buyer in the capital could choose from 7.18 new economy-class apartments, this spring – from 3.93 apartments, and in July – from only 2.99 apartments. This is probably one of the lowest indicators since the beginning of 2006.
If such trends continue, and no more projects are offered in the economy class of new construction housing, it is likely that prices may jump up in the fall, as happened in Klaipėda this spring.
Be that as it may, the weighted average of supply prices in the future will depend on real estate developers – whether they build enough affordable housing projects.
Over the past two months, few real estate developers have raised the prices of their proposed projects, but as the market bought up the cheaper housing offered in the projects, weighted average prices in all classes increased.
The average price per square meter of economy class increased to LTL 5,648 (compared to April and May, the growth reached 2.29%), mid-class – to LTL 6,601 (+1.62%, respectively), and prestigious – to LTL 11,291 (+4.26%). The total average price of all segments reached LTL 7,028 (+6.3%).
The situation is different in the secondary market, where brokers and resellers of new construction housing operate. Real estate properties here are often significantly overvalued, and news of falling real estate prices in Latvia and Estonia has caused a stir.
The prices of real estate objects whose prices have been excessively raised may fall. Sellers in the primary market are traditionally the last to reduce prices.