Insight
EIKA Development Director Martynas Žibūda:
“The total number of apartments sold in Vilnius in the third quarter of 2019 once again made us gasp – a total of 1,515 new apartments were sold: 599 in July, 485 in August and 431 in September. This was the most active quarter since the 2008 economic crisis. Already in the first nine months of this year, more apartments have been sold in Vilnius than in the entire previous year: 4,470 apartments this year compared to 3,984 apartments last year. If last year buyers in Vilnius bought an average of 330 apartments per month, this year this indicator already exceeds 500, which corresponds to a housing market growth of 53 percent.
Buyers were more active than developers this summer, which led to a decrease in vacant apartments – there are currently 4,230 vacant apartments on offer, or 2 percent less than three months ago. It seems that this trend will be temporarily prolonged, as the supply of the most popular product – middle-class housing – is running out. We should not expect a more significant wave of supply until next year, so it is highly likely that this will reduce the sales volumes of the last quarter. We have partially seen this trend of slowing growth for the second month in a row. Another reason potentially cooling the market is the possible deterioration of expectations of the population due to warnings about the slowing economy of the euro area.
The exceptional activity of buyers and increasing construction costs led to the average price of new housing in Vilnius reaching 2084 eur/sq m, which is 3.9 percent more than a quarter ago or 6.4 percent more than a year ago, when it reached 1959 eur/sq m. In individual housing segments, such as the economy or middle class, the price increase is even higher, respectively – 8 and 10 percent growth per year. The average was reduced only by the prestigious class, the prices of which remained almost unchanged over the year.
Facts
- During the third quarter of 2019, 1,515 apartments were sold in the primary housing market of Vilnius, which is 27 percent more than the record-breaking third quarter of 2018 (1,194 apartments), and 3 percent more than the second quarter of 2019, when 1,469 apartments were sold.
- The largest share of transactions was made up of middle-class housing sales – 50 percent of transactions, slightly less of economy class – 43 percent of transactions, and about 7 percent of sales were in the luxury housing segment.
- Compared to the third quarter of last year, the number of buyers of economy-class housing increased the most – by as much as 65 percent (650 apartments). Middle-class sales grew by 36 percent (760 apartments), and luxury housing sales were half as low (105 apartments).
- During the third quarter of 2019, the amount of unsold housing decreased by almost 2 percent and currently stands at 4,230 vacant apartments, which is 5 percent less than at the same time last year.
- Completed and under-construction apartments account for 18 percent of all unsold apartments, while the remaining 64 percent of vacant apartments on the market are still under construction.
- During the quarter, supply contracted the most in the luxury housing segment – 11 percent, in the middle class supply increased slightly – 3 percent, and in the economy class – 5 percent. It also decreased.
- In the third quarter of 2019, real estate developers offered 1,450 new apartments to the market, i.e. 8 percent less than in 2018, when construction and sales of about 1,570 apartments began.
- During the third quarter of 2019, the largest price change was in the middle class, where the price of apartments currently on the market is 6.3 percent higher compared to the second quarter of 2019 and 9.9 percent higher than a year ago. In the economy class, prices also grew during the quarter – by 4.4 percent, and the annual growth reached 8 percent. In the only luxury segment, the prices of new apartments decreased by about 1 percent per year. The price level currently reaches 1,520 EUR/sq m in the economy class, 2,168 EUR/sq m in the middle class and 3,117 EUR/sq m in the prestigious class.
- Due to the above-mentioned price changes and the reduced share of luxury housing in the supply, the total average price of new housing in Vilnius grew by about 3.9 percent – to 2,084 EUR/sq m. per quarter or 6.4 percent per year.