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Tomas Sovijus Kvainickas, Head of Real Estate Analysis and Investment at Inreal Group, explained that the price changes were due to structural changes in the market.
According to him, in the projects introduced in the new market, the prices differ from the market at that time for many reasons. For example, the stricter requirements for buildings increase the cost of the works and the increasing attractiveness of the area increases the cost of the plots. Architectural and engineering solutions also make projects more attractive, so they not only become more competitive in the market and as a result, the developer can sell more expensive apartments, but at the same time development costs increase for him, so they must be covered.
“So if better or more interesting projects are developed in the area, prices go up. But this price comparison is like comparing apples with oranges ”, TSKvainickas is convinced.
The price changes presented should be seen more as an indication of “how much can I buy a house.”
The second group of changes is the market situation. If the selected project left only 10 apartments in the entire area in competition, which are located in a specific area, for example, 60-70 m2 M. meter.
“In such cases, the laws of supply and demand work. Supply is decreasing, price is rising. Similarly, if a market surplus forms in the market, a surplus supply forms and prices fall. to accelerate the implementation of the project, ”he said.
“For how much can I buy a house”
The third group, according to TSKvainickas, is the calculated or changing attractiveness of the project itself.
“It just came to our attention then. A project is launched, with dozens or dozens of sales, although the developer expected to sell significantly less. In this case, the prices increase because there is a reasonable assumption that the prices were too low given the speed. about the sales.
Another option is a changed environment. If it turns out that streets will be rebuilt and public spaces will be installed next to the project, there will be reasons to raise or lower the price if an object is opened that reduces the attractiveness in the vicinity, “he said.
According to TSKvainickas, in light of these groups of changes, the price changes presented should be seen more as an indication of “how much a house could buy”, rather than “how much a house similar to the one my friend bought three years ago could buy. “.
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