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On Tuesday he opened the Bank of Lithuania’s annual real estate conference.
“It is definitely not the time to rejoice now and think that everything is over,” said V. Vasiliauskas. “We live in the conditions of the second and we do not know if it will be the last quarantine, so it is not easy to predict what the consequences will be for the economy and the real estate market.”
According to him, at present “an extremely wide panorama of risks is unfolding before the eyes”, the degree of uncertainty is not diminishing anywhere.
He questioned whether the housing market will continue to be so resistant, if the population will be able to adequately fulfill the obligations already assumed with the banks.
Photo by Lukas Balandis / 15min / Vitas Vasiliauskas
V. Vasiliauskas points out that the pandemic sector affected more food, accommodation and travel organization. According to him, although the proportion of Lithuania’s Gross Domestic Product (GDP) generated in them is less than 2%, young people between 18 and 35 years old tend to work here.
“After all, young people are the most active home buyers and renters,” said the chairman of the board of the Bank of Lithuania.
He also said that we had seen uncertainty in the commercial real estate market before the second quarantine, and that the outlook for the sector was more blurred, with vacancies growing next year and a pandemic restricting normal commerce and moving it into cyberspace.
Photo by Sigismund Gedvila / 15min / Workers
“The commercial real estate market faces serious challenges and they will only intensify if the current changes mean structural progress and become a new reality in the post-pandemic world,” said V. Vasiliauskas.
In addition, the situation of real estate development and construction companies is unambiguous, said the governor of the Bank of Lithuania.
He said that the deterioration of the economic environment is one of the first to be felt by the construction sector, so it needs to assess risks and accumulate financial reserves for contingencies.
According to V. Vasiliauskas, we cannot forget about the current risks in the real estate market before the pandemic: the proportion of the population that takes the most active loans is decreasing and companies in the sector are having difficulties obtaining loans from banks.
The market has not collapsed
V. Vasiliauskas said that although some observers predicted the collapse of the real estate sector at the beginning of the pandemic, this did not happen, especially with the housing market.
“On the contrary, the housing market has recovered again after the first scare,” said the chairman of the board of the Bank of Lithuania.
According to him, in the fall of this year, sales of new apartments have already exceeded the average of previous years.
According to V. Vasiliauskas, this is determined by population growth, especially in Vilnius, as well as by the rapid development of financial services and financial information technology companies in the capital.
“There are a growing number of relatively high-income buyers and renters who need more quality homes,” he said.
A representative from the bank also highlighted the record affordability of housing, meaning wages are growing faster than house prices and borrowing conditions remain favorable.
“Faced with a pandemic, the valuation of the real estate market does not change: although the segment is historically active, its position remains sustainable,” said V. Vasiliauskas.
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