Last month, 347 new housing units (apartments and terraced houses) were agreed upon in Vilnius. This result makes the month almost a third more active than July (264), more than double the figure from the end of 2023 (226), and 45% higher than in August of the previous year (239).
Supply increased slightly: two new projects with 77 homes of 69 apartments and 8 terraced houses were added in August. Due to increased demand, the overall inventory decreased by about 2.9% from 5,503 to 5,342 dwellings.
Šarūnas Tarutis, Head of Investments and Analysis at Citus, commented on the situation: ‘The current demand in the primary Vilnius market suggests the beginning of a market recovery after a long period. There will likely be fluctuations, and some months it may be scarce. However, the optimism of developers, which has allowed the stock of housing in the capital to grow to almost 5,500 units, which was optimal 2–3 years ago, indicates that a positive trend is emerging. It is also supported by improving affordability, mainly driven by rising wages (although growth has slowed down) and falling Euribor base rates, as housing prices have remained essentially unchanged’.
He predicts that this trend should solidify by the beginning of next year when a more noticeable increase in housing prices can be expected. This is because new requirements for dwellings, which have re-emerged this year, are driving up development costs. As demand grows, developers will have less motivation to absorb these increased costs.
According to Citus analysts, the average supply price of apartments in Vilnius grew by only 0.42% monthly to EUR 3,369/sqm. At the beginning of the year, it was 2.09% lower; a year ago, it was 3.28% lower. At the end of August, the 6-month Euribor interest rate, which is most relevant to homebuyers, was 3.360%, approximately the same level as in March–April last year.
This has led to an improvement in housing conditions. The CITHAI (Citus Housing Affordability Index) has increased by 10.45% since the lowest level reached in the third quarter of 2023 (when two people earning an average salary could buy new dwelling with a bank loan in Vilnius up to an area of 54.87 sqm), reaching 60.49 sqm in the middle of this year.
According to the current Euribor downward projections, affordability is also expected to improve by around 4% in the third quarter and another 5.3% in the final quarter.
Šarūnas Tarutis continued his observations: ‘Affordability is also influenced by the decreasing size of the purchased dwelling, as properties are being designed more efficiently. The average size of a dwelling for sale has fallen by around 3% over three years, from 53.45 sqm to 51.60 sqm. The most significant drop was in the area of 1.5 and 2 rooms, down by 5% each (1.73 sqm and 2.12 sqm respectively). However, we have recorded an increase in the higher segment, large-area dwellings: the areas of 4– and 5-room apartments grew by as much as 7 and 9 sqm, respectively. Though, their demand is only a tiny part of the overall market’.
In Kaunas, housing affordability improved by 9.1% over the year. The area of a dwelling purchased with a bank loan by two people earning the average salary increased by 59.95 sqm to 65.4 sqm. The number of transactions there was also relatively high in August. During the month, 73 new dwellings were sold on the Kaunas market – 40% more than in July (52) and almost 24% more than a year ago (59).
Supply in this city contracted slightly (from 1,096 units in July to 1,031 units in August – 5.9% less), and one new project of 57 apartments was introduced to buyers.
Prices increased by 1.12% to EUR 2,702/sqm. At the beginning of the year, new apartments were sold at an average price of EUR 2,601/sqm (up by 3.88%), while a year ago, they were sold at EUR 2,599/sqm (up by 3.96%).
In Klaipėda, the CITHAI affordability index improved similarly to Kaunas, increasing by 9.04% (from 66.33 sqm to 72.22 sqm). However, this did not significantly boost demand: 28 transactions were made monthly, slightly exceeding the year’s average of around 20 monthly transactions. July saw more activity with 43 transactions; a year ago, this number was 39.
Supply in the port city has also been slow lately, with no new dwellings coming on the market in a month, causing the inventory to decrease slightly. By the end of August, the total inventory was 550 homes, about 4% less than in July but 18% more than a year ago.
New housing prices in Klaipėda increased moderately monthly and annually, but more noticeably than in the other two major cities: 1.34% and 5.64%, respectively, and reached EUR 2,265/sqm.
