May was calmer in Lithuania’s two largest cities than April: historically, the market would pause for a breather in summer for June or July, and it was typical to view this as the influence of seasonality. However, neither 2020 nor this year has been “classic” on the housing market – even Christmas fever didn’t impact housing sales last year and so the reasons for change should be sought elsewhere.
“The result is extremely high and has reached around the point we are inclined to predict for Vilnius in the long term, which is some 800-900. This is one of the all-time best results after the peak in March and April, which blew away the symbolic threshold of 1,000 home reservations in one month. I hope that the result will remain stable for a longer period because this would indicate the emergence of a balance in both demand and pricing,” says Šarūnas, the investment and analysis head for the company Citus, which develops housing projects in both Vilnius and Kaunas.
According to Tarutis, the market has remained active despite the rapidly increasing prices, but the lack of supply has become evident.
“When the market began recovering in May-June last year and the big home market growth wave hit Vilnius in July, we all guessed at how much this was a “compressed coil” effect where people postponed home purchases due to the quarantine, but afterwards, everyone began buying. However, this was probably not the lion’s share of the entire result – the city continues to grow, living standards have improved, and the growth in prices and decrease in supply also contributed,” the market expert said.
“It is prices and supply that could play a decisive role during this period. Prices balanced out demand and people are no longer buying up everything possible, which we saw several months ago. Meanwhile, supply faltered: while over the space of a month, more than 13 new projects were presented to the market with almost 500 apartments, the market “consumed” twice that number, and the so-called “store” continued to decline and departed from the threshold of 5,000 homes that analysts sometimes describe as optimal.”
By late May, there were 3,804 unclaimed homes to choose from in Vilnius, while in late April there were 4,091. Even given the current pace, the existing store of supply could be fully exhausted within just five months. Increased supply not only could help stabilise home prices but would also increase the options available to buyers seeking a high-quality home in line with their needs, rather than buying out of fear that they might not be able to do so later on.
In the temporary capital, 86 new home purchase contracts were signed in May. This is the average purchased a month during the successful year of 2019, and only January figures this year were better.
However, one indicator in this city concerns specialists. In Kaunas, according to data analysed by Citus, not a single new home was offered to the market over a month, and supply decreased to 779 – a quantity which would factually be sold within a month in Vilnius.
“The Kaunas market has always been more modest, far smaller than Vilnius,’ and fluctuations are typical for various categories. Nevertheless, I believe that zero supply growth is something of a market misunderstanding, and next month we will see an entirely different picture. After all, even Alytus is seeking developers who could offer new projects to its residents. I have no doubt that Vilnius will settle down in a few months, while Kaunas will get warmed up and both markets will return to their normal rhythm, which was distorted by the pandemic,” says Tarutis.
Facts and figures
- The number of home apartment and terraced house reservations on the Vilnius primary market: May 2021 – 756; April 2021 – 1,142; May 2020 – 112; May 2019 – 609 (Citus data);
- The number of home apartment and terraced house reservations on the Kaunas primary market: May 2021 – 86; April 2021 – 129; May 2020 – 48; May 2019 – 81 (Citus data);
- The supply of homes on the Vilnius primary market: May 2021 – 3,804; April 2021 – 4,091; May 2020 – 5,722; May 2019 – 5,767 (Citus data);
- The supply of homes on the Kaunas primary market: May 2021 – 779; April 2021 – 862; May 2020 – 1,005; May 2019 – 1,145 (Citus data);
- The number of reservations in projects managed by Citus: May 2021 – 25 (Vilnius – 12, Kaunas – 13) (Citus data).
This article was edited by professional copywriter and proofreader Vicki Leigh. Find out more about her expert writing and editing services at twoflowercactuscreative.com
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