Martynas Žibūda, director of development at EIKA
It appears that the shock caused by the coronavirus pandemic has only left a 4-5 month-long trace on the “cardiogram” of Vilnius primary home market. Since April, sales have continued to rise by tens of percentage points month on month with 620 apartments sold in September, matching the record levels of sales seen back in January and February this year. It appears that higher sales volumes are only limited by slower supply of the mid-range properties – the category of homes most in demand. This is due to the brief postponement of developer investment in construction and purchasing of new plots. Time will tell whether this is a “compressed spring” effect, when alongside the usual flow of house-buyers, people who had postponed purchasing a home during the lockdown months are also returning to the market. However, it seems that during the lockdown a proportion of Lithuanians not only managed to maintain their income levels but were also able to accumulate further savings by reducing their expenses. Potential home-buyers are now hoping to invest safely as well as profitably in the real estate which is consistently becoming more and more expensive. In addition to the investors, we are being approached by many house-buyers, typically families, who have decided to improve their homes and who want to increase the space available to them. This is particularly relevant in the current climate when people are spending more and more time at home.
After the lockdown, sales have returned to the level of the record-breaking year 2019: over the past three months 470 apartments have been sold on average – exactly the same as last year’s average. However, a red light is flashing with regards to the declining supply. Developers who have halted or abandoned projects during the lockdown are unable to keep up with the increasing sales seen every month and cannot offer new apartments to the market quickly enough, which creates a deficit and could cause an increase in prices. Another important aspect in terms of supply is the drastic reduction in supply of the mid-range properties. One quarter has seen the supply in this segment dip by a whopping 30%: from 1,908 to 1,342 apartments. The lack of affordable housing close to the city centre, usually bought by younger individuals, i.e. mainly the middle-range homes costing around 1,800-2,400 euro per square meter, allows the developers to increase house prices in certain areas of Vilnius. Furthermore, over the last quarter only, ten projects out of the 800 apartments on offer did not include a single plan for mid-range homes. This situation could continue because developers are finding it increasingly difficult to find new territories for development in Naujamiestis, Žirmūnai or Šnipiškės and most of them carry with them the risk of leasing the land and the uncertainty over the potential expenses due to the implementation of the land law.
- In Q3 2020 the primary home market in Vilnius saw the sale of 1,406 apartments, which is just 7% less than the record-breaking Q3 2019 (1,515 apartments), but an entire 242% more than Q2 2020, during the lockdown, when just 411 apartments were sold.
- The largest segment of sales was in economy class – 43% of the total, with the middle class close behind at 41% of total sales and 16% of sales going to the luxury apartment segment.
- During the quarter, the number of vacant homes in Vilnius fell by as much as 15% and is currently down to 3,540 vacant apartments.
- Around 38% of these vacancies are completed or near-completed apartments and two thirds or 62% of apartments being sold are in the midst of construction.
- In Q3 2020 the real estate developers offered 800 new apartments in ten different projects, which is 12% less than in Q2 2020 when construction and sales of 900 apartments were launched.
- Over Q3 2020 the apartment prices in Vilnius have changed most in the economy class, growing by 3.4%. In the middle class, the growth was smaller – 1.8%, while the luxury segment saw no increase in prices. Price levels are currently at 1,630 EUR/square meter in the economy class, 2,255 EUR/square meter in the middle class and 3,140 EUR/square meter in the luxury class.
- Due to the abovementioned price changes, the combined average price of a new home in Vilnius rose by 1.9% over the quarter: from 2,100 EUR/square meter to 2,140 EUR/square meter.