EIKA Development Director Martynas Žibūda:
In 2019, new apartments valued at 0,56 billion Euro were sold in Vilnius which is a 49 percent increase over 2018, when 380 million Euro worth of apartments were sold. Last year, 68 percent of this amount was spent on the purchase of more expensive housing: prestigious and middle-class apartments were purchased for about 100 million and 285 million Euro, respectively, while economy-class apartments were purchased for 177 million Euro.
In terms of the number of apartments sold, last year an all-time record was reached when 5,646 new apartments were sold in Vilnius. That equates to 42 percent more than in 2018 (3,986 apartments) and 22 percent more than in 2007, which was the prior record year (4,610 apartments).
While analysing the transactions of EIKA apartments in the last few years, we do not see any significant changes in the financing structure of transactions; buyers’ activity is determined not by increased indebtedness, but by increased personal income, and the growing number of residents, employees, and tourists in Vilnius.
Last year, more expensive housing located closer to the city centre was seen as the safest investment for accumulated savings. Investors – the largest group of customers who have carried out a total of about 37 percent of all transactions – purchased housing using their own proprietary capital in four out of five cases. Loans dominated in the transactions of other customers, but the customer volume itself increased proportionally across all customer categories. Twenty-four percent of apartments were bought by couples who do not have children, 21 percent were purchased by single people, and about 14 percent by families.
2019 was an active year, not only for buyers but for housing developers as well. 4,930 new apartments were offered to the market, which is 9 percent more than in 2018, when the construction of 4,520 apartments began. This is the highest supply that has been recorded since 2008. However, this increased activity of developers has led to a 15 percent drop in unsold flats per year. Currently, there are 3,913 vacant apartments. Only 36 percent of this inventory consists of apartments that are completed or under construction, while two out of three apartments that are for sale are in the early stages of construction.
Adequate supply has resulted in housing prices being more moderate than an average income or mortgage interest rates. The total average cost of new housing in Vilnius increased by 5,3 percent, from 1,965 Eur/sq. m. to 2,070 Eur/sq. m., early this year. The growth of construction costs and the higher activity of buyers than developers seem to have had the greatest impact on the selling cost of cheaper housing.
In terms of expectations, it would be difficult to expect a more successful year than the previous one, but the market should still remain very active and competitive. Assuming there are no geopolitical events that will affect the expectations of the population, and unless the principles of corporate and residential financing and state land regulation change dramatically, we expect similar healthy market indicators for the year 2020.
- In 2019, new apartments valued at 560 million Euro were sold in Vilnius, which is 49 percent more than in 2018, when apartments valued at 380 million Euro were sold. In addition, this is even 58 percent more than the prior record sales in 2016.
- In 2019, 5,646 apartments were sold in the Vilnius primary housing market, which is 42 percent more than in 2018 (3,986 apartments).
- Middle-class sales accounted for the largest part of the transactions – 50 percent. The economy class was slightly behind at 41 percent of transactions, and 9 percent of sales were in the prestigious housing segment.
- The number of middle-class housing buyers increased the most over the year, by 53 percent; 2,810 apartments in 2019 compared to 1,836 apartments in 2018. Sales of economy and prestige-class housing increased by 35 percent and 20 percent respectively to 2,301 and 535 apartments in 2019.
- In 2019, the amount of unsold housing dropped by 15.5 percent and currently there are 3,913 vacant apartments.
- Only 36 percent of this inventory consists of apartments that are completed or under construction, while 2 out of 3 apartments, or 64 percent, that are for sale are in the early stages of construction.
- The largest drop in unsold apartments was recorded in the prestigious segment with a fall of 21 percent, economy class with a fall of 19 percent and the most popular middle-class with a fall of 11 percent.
- In 2019, a new record in real estate developers’ activity was recorded – 4,930 new apartments were offered to the market, which is 9% more than in 2018, when the construction and sale of 4,520 apartments was launched. This is the highest supply that was recorded since 2008, the prior record year.
- During 2019, the price of new apartments in Vilnius increased the most in the economy-class segment – by 10,6%, with an increase of 6,2% in the middle-class segment, and in the prestigious segment a decrease of 0,4%. Currently the price level is 1,535 Eur/sq. m. in economy-class, 2,115 EUR/sq. m. in middle-class and 3,124 EUR/sq. m. in prestige-class.
- Due to the above-mentioned price changes and the decrease of the economy class housing supply, the total average cost of new housing in Vilnius increased by 5,3 percent, from 1,965 Eur/sq. m. to 2,070 Eur/sq. m. early this year.
- In 2019, EIKA buyers’ analysis revealed that investors remained the largest buyer segment accounting for about 30 percent of transactions. Accordingly, the couples without children accounted for 29 percent of the transactions, single individuals 18 percent, families at 13 percent, parents who are buying for children totalled 5 percent, children who are buying for parents was 2 percent, and all other (companies, etc.) totalled 5 percent.
- The study shows that in 85 percent of cases, investors purchased middle-class or prestige-class housing, and in 81 percent of cases they were paying for it using their own proprietary capital.