According to Mantas Umbrasas, the sales director of Darnu Group, one of the largest companies creating living, business and leisure spaces in Lithuania, wage growth in Vilnius has reached double-digit percentage over the last few years, and has been increasing well above the house pricing or interest rates. According to the specialist, as the economy of the whole country grows, consumer confidence is currently at its highest level since 2008, and the demand for real estate is also additionally increased by a recorded slight positive migration.
“With this combination of circumstances, opportunities and willingness to buy real estate are increasing, and we are also witnessing a shift in demand towards higher-quality, higher-end housing. Our market analysis shows that the balance between supply and demand in terms of number of rooms and floor space indicates a general trend towards a reduction in housing space towards a higher quality or even more luxurious alternative for living place“, says M. Umbrasas.
Highest growth rate in five years
In the third quarter of this year, sales of apartments in Vilnius were 28.1 percent higher than in the corresponding period of the previous year. Sales of high-end housing increased by 29.6%.
According to M. Umbrasas, sales growth rate in 2019 is by far the highest in the last five years. Compared to the corresponding period of the previous year, 37.7% of annual sales volume increase has been observed.
“The number of apartments sold in Vilnius has already exceeded the results of all the previous years. It is likely to reach around 4,800 apartments by the end of the year, or nearly a third more than last year, when 3,671 apartments were sold”, says M. Umbrasas.
Sales of high-end housing in the capital have grown by 24.3% in the first three quarters of the year. With a third of the market in this class, Darnu Group retained its leading position, by selling 144 apartments in the first nine months, all of them in Paupys, a district of the Old Town revitalised during the largest conversion project in Lithuania. In the third quarter alone, 65 apartments were sold there, or the maximum number among all high-end housing projects in Vilnius. Another 93 apartments were sold by Darnu Group in Paupys last year.
This year Darnu Group invests 40 million euro in residential blocks in the Paupys project – soon the first three blocks will be completed here, with 382 apartments and commercial premises.
Choosing better-designed and higher-quality housing
According to M. Umbrasas, in the second quarter of this year, the housing affordability index increased by 12.3 percentage points. This change, the growing sales of high-end housing and demand analysis have highlighted a new trend towards smaller but higher quality housing.
“More and more residents of Vilnius are choosing to live closer to the city centre, where more quality infrastructure is concentrated and higher quality of life is ensured. The possibility to choose a smaller but rationally designed, higher quality or even more prestigious home outweighs the number of square metres”, says M. Umbrasas.
According to the expert, stable macroeconomic environment, positive expectations of the population and real wage growth, which will outpace the increase of housing prices, will remain the main accelerators of sales of new build apartments.
“Macroeconomic indicators are also reflected by the steadily increasing proportion of new built apartments in the common sales pot, which this year has reached 38.6 percent. By comparison, in 2018 it made up 34.4 percent, while a year earlier - 35.6 percent from all recorded trades. So sales of the new built apartments continue to grow faster than of the older ones”, notes M. Umbrasas.