«Earlier, a square meter of housing in Vilnius cost €850, now it costs €2,000.» What should a simple buyer do in the Lithuanian real estate market?
Apartment prices in Lithuania continue to grow. According to representatives of the Central Bank of the country, real estate is already overvalued by about 7%. But what does that mean? Does it hint towards a «soap bubble» in the market, which must sooner or later burst, or does it indicate an increase in the value of real estate? We have discussed these issues with an expert — Viktoria, a realtor from the DomLidera real estate agency. Viktoria will also give us her personal rating of properties that you should pay attention to if you want to buy an apartment in Lithuania.
«Miracles do not happen: low prices in the primary market mean a decrease in the quality of construction»
How are things on the Lithuanian real estate market? How active are local investors and can foreign investors enter the market now? Why has the cost of apartments in Lithuania grown so much (and continues to grow)? And what, finally, should a simple buyer do in such conditions? One of Realting.com’s journalists turned to the Viktoria, a realtor from the DomLidera real estate agency, with these and more questions.
— The Lithuanian real estate market today is very «lively»: both demand and supply are growing. Now we are witnessing a so-called «seller’s market» — this means that housing prices are rising, demand is growing even more, and there are fewer and fewer choices. And the situation is unlikely to change in the near future.
Changes in the real estate market are associated primarily with the pandemic. Mass movements have been limited for people around the world for a considerable amount of time, so everything related to recreation began to be concentrated within the country. In addition, these conditions make it impossible to make any economic forecasts, so many businessmen have begun to plan their activities within the country. As a result, the market for buying and renting real estate began to grow. And the biggest surprise was the rather active growth of markets in small towns. Now the cost per square meter is higher than in the last 13 years of observation. Moreover, this growth occurred in just six months, which is even more surprising.
According to official statistics, the cost per square meter in the Lithuanian real estate market has increased by 14-21% over the past year. In large cities, there was indeed a record increase in housing prices: in Vilnius — by 22%, in Kaunas — by 20%, in Klaipeda — by 18%.
— Now the cost per square meter in Vilnius has grown from €1,700 to €4,500. If you display the average price of quality housing, then we will talk about €2,500 per square meter. To better understand how the market has changed, it is enough to know that a year ago in Vilnius you could find housing for €1,000 per square meter, and two years ago — for €850.
In Kaunas, the cost of a square meter ranges from €1,200 to 3,500, while on average, quality housing here costs €2,000 per square meter. In Klaipeda, the price range is from €1,200 to €2,500, in Palanga — from €1,700 to €6,000, in Sventoi — from €1,300 to €3,000, in cities of regional significance — from €850 to €1,100. For comparison, last year housing prices in regional cities ranged from €300 to €650.
The growth in the cost of a square meter is due to many factors, and Lithuania is not unique in this regard: rising prices for building materials and labor, increasing demand for real estate, lack of «free» land, etc.
At the same time, the cost per square meter in the primary and secondary markets is now relatively the same. The difference in price depends more on the city, area and quality of construction — but not on the age of construction. For example, in the central districts of Vilnius, the cost of primary and secondary housing is practically the same, because the land is expensive there, the place is valued and the cost of land for development is very high. Here the only thing worth focusing on is the quality of the building itself. If the house has earned a bad reputation, then the prices for apartments there will be lower. The same applies to the primary market — not all developers use the latest technology, trying to reduce the cost of construction. And only in this way do they try to offer a competitive price for their properties. There are no other price reduction options.
I would like to warn buyers of any real estate: cheap housing is most often not of high quality — there are no miracles. The construction process is becoming faster due to new technologies, but the quality, unfortunately, is declining. This applies, for example, to the environmental friendliness of construction sites, and other equally important criteria. Many construction companies use new materials that are considered very technological, but they require additional costs for the operation of facilities in the future. For example, the construction of energy-efficient houses leads to the fact that a large amount of synthetic insulation is used and there is not enough high-quality recuperation in the premises. And high-quality recuperation entails the constant use of electricity, which means higher utility bills.
As in the rest of the world, the cost of building materials has skyrocketed in Lithuania, and there is a shortage of wood, too — all this leads to an increase in property values. The increase in taxation, the increase in tariffs for fuel and utilities also affects the situation. This automatically increases the cost of the service itself, and hence the price of a square meter in the end.
At the same time, properties on the secondary market are much more interesting than those on the primary one. This is especially true, for example, for Palanga, where there is no free land anymore. Therefore, secondary market properties are not getting cheaper, nor will they anymore. And new buildings are being built either outside Palanga or on the outskirts of the city, and because of the location they lose to the secondary market.
Real estate is bought by locals to save their money
— One of the important factors in the high growth in demand for real estate was inflation, which in our country reached 4%. In such conditions, Lithuanians try to save their assets, and most often they invest in real estate. Until February 2022, local residents tried to make the most of their mortgages, realizing that inflation would «eat» some of it. After the introduction of new rules for the acquisition of second homes, the demand for loans may decrease, but, in my opinion, not significantly.
As an investment, real estate is always interesting — this is the only thing in which you can invest «live» money and not lose it to zero during inflation or some other changes. Literally 10 years ago, we had such a thing as deposit accounts and profit from deposits. But now all over the world deposit rates are low or even negative. Therefore, in order to save money, many people invest in real estate. Therefore, real estate in Lithuania, Poland and any other country (where there is no war) is in any case interesting for investors.
We see that local players have entered the market, while foreigners, on the contrary, have practically disappeared from the «radar» of our real estate sellers. For foreign investors, the topic of Lithuania was closed today due to problems with entry. This extreme situation has been going on for two years now — any tourist visas (including Schengen ones) are now not good for entry. Even if you are a millionaire investor, you need to get permission from the ministry to enter the country.
Entry into the market of foreign investors today is available only in a few cases: either through participation in a government program, or participation in the production of something. As a rule, they plan to open, expand, resume the production of something. They open branches, new representative offices, factories, production facilities — and then they look for land or rent of commercial space. There were also appeals from investors who run the rental business: hotels, apartments. Despite all the covid restrictions, this group of buyers continues to be interested in the market.
There are practically no ordinary foreign property buyers who want to buy one or two apartments to rent out (or for themselves). Deals can also be executed remotely, but this is pure adventurism — buying apartments without looking at them. Therefore, I now often get requests for the sale of the real estate of foreign investors in order to relieve themselves of the obligation to maintain these properties.
By the way, I would like to emphasize that any property requires management. Before buying a property as an investment, you always need to figure out whether this money will work and whether depreciation will eat up your investment. You can’t just buy a property and just keep it without understanding what it was bought for. Today, almost all properties are associated with some kind of maintenance, taking care of the territory and paying utility bills. Maintenance of any property will always be paid, regardless of the property itself.
Her personal TOP-3 interesting new buildings in Vilnius
A condominium near Vilnius for €189,000
In the summer of 2021, construction began on a very interesting low-rise residential complex near Vilnius. On the edge of a national park among a pine forest on the site of an old estate, a complex of 12 detached houses will soon appear, located on their own plots of 7.5 acres.
The total area of each house is 135 sq. m. Their layout is free, all internal partitions can be changed. Preliminary accommodation is provided on the ground floor of a common hall, warehouse, bathroom, garage, kitchen with a dining area. On the second floor there is a bathroom, three bedrooms and a dressing room. Each house has its own terrace.
As for communications, everything is organized at the highest level. Water comes from a well for the entire complex. Heating is geothermal, each house has a well-thought-out recuperation system. Each house has its own cleaning systems. They have a class A+ energy saving system.
There are about 16 kilometers to the main infrastructure of the capital, and around two to the nearest village. Schools, public transport, and shops are three kilometers away. Nemenčinė, a town with a full-fledged infrastructure, is 8 km away. You can get to the house by public transport (railway, bus) both from Bezdonis and from Nemenčinė. If you take your own car from Vilnius (starting in the Antakalnis area), the journey will take about 15 minutes. The declared €189,000 includes a plot of land, and a house with a partial fine finish (you will only have to finish the interior and equipment to your liking). It comes with a 10-year construction guarantee.
A one-bedroom apartment in Vilnius for €85,400
In one of the new districts of Viljuns, just 10 minutes from the city center, the construction of an interesting residential complex has already been completed. A one-bedroom apartment with a total area of 68.3 sq. m is for sale. The peculiarity of this proposal is its own fenced yard.
The complex is located near lakes Salote or Gilužis with equipped beaches and playgrounds, forests with equipped playgrounds and hiking trails, where there are excellent ski slopes and fun slides in winter. The geographical position provides convenient communication lanes with the center of Vilnius (only 10 minutes by car) and other areas. Thanks to the western bypass of the city, communication has become even more convenient — you can bypass traffic jams in the morning and after work.
The houses are built according to the latest technologies: three-layer prefabricated reinforced concrete walls, painted (insulation — 29 cm NEOPOR); underfloor heating individually tailored to each apartment; a rotary heat exchanger in each apartment; six-chamber plastic window frames with three gaskets (profile depth up to 86 mm), three-chamber, two-chamber double-glazed windows, internal window sills. Energy saving class A++. All apartments not located on the ground floor have spacious balconies. Apartments on the ground floor also have wooden terraces in individual courtyards.
A one-bedroom apartment in Vilnius Old Town for €134,749
This apartment is interesting, first of all, for its location. An exclusive new generation residential building in the historic Old Town of Vilnius. The wide three-dimensional windows of the house offer a panorama of the Old Town, right next door you can see the bastion of the Vilnius defensive wall, the Gate of Dawn, the Church of St. Theresa.
The well-designed courtyard is equipped with a playground, sidewalks, lighting, landscaping, and is open only to residents of the house and their guests. Under the entire plot of the house there is an underground car park, 90 parking spaces, as well as bike racks. Surveillance cameras have been installed around the territory and underground parking.
In this residential complex, a 2-room apartment with a total area of 38.39 sq. m. is for sale. The apartments are located on the third floor of a four-storey building. A total of 81 apartments have been designed in the complex. The windows of the apartments are wooden. The windows of the attic floor are aluminum profiles, external blinds with a drive are installed to protect against direct sunlight. Outdoor and attic terraces are covered with wooden planks.
Do you want to buy an apartment in Vilnius? Go to the «Lithuanian Real Estate» section on the Realting.com platform and leave a request for the option you like. Property managers will contact you as soon as possible.
