If not for the double lockdown, last year would have, without a doubt, been a record year for the capital’s housing market. That said, after the first lockdown there were those who predicted records in the opposite direction and a collapse but this never happened. In short: what and why, because even I don’t recall having spoken this much about the market any other year.
For the full year: the number of reservations in Vilnius for 2020 reached 5,479 new apartments and cottages. This is just 10% less than in 2019 (6,058) but 28% more than in 2018 (4,281) and 44% more than in 2017 (3,798).
Things are a little slower in Kaunas because the market is smaller. 838 apartments have been reserved – 21% fewer than in 2019 (1,062), 11% more than in 2018 (752), and 24% more than in 2017 (678).
The 2020 Vilnius housing market in four acts
The first quarter of the year. Vilnius’ new housing market climbs ever upward even after the incredible year of 2019 without showing any signs of exhaustion. More than 550 new reservations in January, and well over 600 in February, marks the second-best showing in history. March gains momentum and then – a rather sizeable “boom” – a lockdown is declared in the middle of the month, everyone is frightened, rushing to buy up toilet paper, food and masks but definitely not apartments. The March results are likely halved (because, I would guess, some of the unconfirmed reservations “evaporate”).
April is almost empty— so is May. Over the span of both months, just about a hundred reservations are made across the capital on average. The heralds of “prices will fall,” “the market will collapse” and other omens emerge, some of the market participants truly do start to view the situation, make plans and act with more caution, the banks are more careful in evaluating borrowers. Nobody knows anything and are also afraid to guess because the situation seems truly risky.
Finally, June arrives and mid-way through, the lockdown ends after exactly three months. Market results are similar to March – half a month, plus the “evaporated” reservations and the numbers would look identical.
July still brings similar results, but both months exceed forecasts. This shows an important aspect – the lockdown was not a crisis, it was a temporary “technical suspension” of the market. Akin to a race car taking a pit stop during a race. Why? Because the external crisis was not economic but rather medical and the sectors suffered little, with those suffering the most having little weight. Consumers expectations recovered because the main part of the home buying audience did not lose their incomes, they were just unsure how to act, and their home choices were limited. This is why everything came to a halt.
In August, the situation improves rapidly and almost catches up to the single-month average for 2018-2019 or surpasses the 2017-2019 average. The lockdown erased seasonality, activity only grows throughout summer and the people, having waited several months and realised that there’s no price collapse on the horizon (price growth was recorded across the entire year, regardless of the number of reservations), begin to enact their plans to buy a new home.
What for? Well, after this much time spent stuck in their homes, people begin to value them as far more than just a place to stay overnight and store their things in. During those times their needs increased, problems were noticed. Finally, in Vilnius, for some time now statistical supply isn’t in line with reality: many apartments are unsold, but there’s little to choose from because some projects are old and unappealing, there are many “hanging” apartments of less liquidity, and so on. Meanwhile during the lockdown, with some companies suspending their plans or investments, the increase in supply slowed down as well.
Statistics in brief: there were 4,958 apartments in reserve in Vilnius in 2020, and in late 2019 – 5,433. Turnover remained similar – more than 50%, which means that annual demand was higher than the quantity of apartments remained at the end of the year.
In Kaunas, at the end of December 2020, there were 1,060 homes in reserve, while in 2019 there were 1,129. In this city, turnover was close to but did not reach 50% because fewer were sold over the year than were in reserve at the end of the period.
In October and November, we see the return to record-setting numbers. December, while calmer, is like a Christmas sale. There is no sign of the seasonal patterns that repeated for many years up to now – the December result is more than one third higher than the year before.
What comes as the greatest surprise in this quarter? The second lockdown, which was imposed before the end of October, but essentially had no impact. Buyers already knew what to expect, had learned to interact remotely, so the purchases made online include not only food and clothes but also homes (Citus sales without any physical contact in, for example, the last month of the year, comprised 67% of the total), awaiting the massive financial stimulus packages being “employed” around the world, which should increase the value of property. I believe that the entire economy benefited from the fact that people did not withhold their decision.
The first lockdown clearly had a greater impact in Vilnius than the second one.
In Kaunas, due to its small market, the situation looks rather even.
The capital becomes a hallmark of the good life
I have no doubt that even during the lockdown, Vilnius continued to grow. High added value businesses and well-paid jobs that are concentrated here were not impacted by the pandemic financially. Employment rose and wages continued to rise. The latest data from the Department of Statistics and Sodra are still due to arrive but what is available already confirms it. Based on preliminary data, on July 1, Vilnius city municipality had 565,374 residents – almost 9,000 more than in the middle of the year 2019; the average wage for those working within the area of the municipality was 1,683 euro in November 2020, which is 9.2% higher than in November 2019 and 45% more than the average of all the remaining municipalities.
Thus, the capital is becoming a bastion of high living standards, so it is natural that the prestige and middle classes were “on fire” here, while the economy class continued to contract.
Last year, economy class no longer made up half the market, comprising just 42% of it. It is being replaced by the middle class, which reached 35%. The prestige and luxury classes hold 12% and 10%, respectively. The breakdown the year before: economy class 50%, middle class 31%, prestige class 11%, luxury class 8%. Turnover was also very high across all classes (economy and middle class 52%, prestige 57%, luxury 48%).
In Kaunas, the economy class is also on a steady decline but still maintains a far larger portion than in the capital. In 2020, the economy class occupied 56% (61% in 2019), middle class 30% (27% in 2019) and prestige class 14% (2019 – 12%). We have not recorded any projects of luxury class in Kaunas so far.
Numbers and facts
- The average number of reservations in Vilnius’ primary housing market (apartments and terraced houses): 5,479 (2020); 6,058 (2019); 4,281 (2018); 3,798 (2017) (Citus data).
- The average number of reservations in Kaunas’ primary housing market (apartments and terraced houses): 838 (2020); 1,062 (2019); 752 (2018); 678 (2017) (Citus data).
- The number of new apartments and terraced houses on offer in Vilnius at the end of the year: 4,877 (2020); 5,433 (2019) (Citus data).
- The number of new apartments and terraced houses on offer in Kaunas at the end of the year: 928 (2020); 1,129 (2019) (Citus data).
- Percentage of sales by the class of apartments in Vilnius: 2020: economy class 42%, middle class 35%, prestige class 12%, luxury class 10%; 2019: economy class 50%, middle class 31%, prestige class 11%, luxury class 8%. (Citus data)
- Percentage of sales by the class of apartments in Kaunas: 2020: economy class 56%, middle class 30%, prestige class 14%; 2019: economy class 61%, middle class 27%, prestige class 12%. No luxury class projects recorded in Kaunas to date (Citus data).
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