The strict quarantine has not been a barrier to housing – the numbers surprise real estate experts who have seen it all.

“December 2020 is a real time of miracles. Particularly painful and difficult-to-predict years were crowned by perhaps historic results. The growth and sustainability of market activity in Vilnius and Kaunas is already visible to the naked eye. Hopefully, continue to be so in the future. Klaipeda is gradually emerging from the ‘margins’ of the primary housing market, and soon we will be able to get really interesting and large-scale projects here, “says Tomas Sovijus Kvainickas, Head of Investment and Analysis at Inreal Group, at a press release.

In December, 672 new flats and apartments were agreed in Vilnius (after evaluating 3 canceled deals). This is 38 percent. more than a month ago and 2 times more than in December of last year. This figure even exceeds the results of October 2020, which were the best since 2012. Thus, the record for new agreements was broken twice in the last quarter of the year, in the second, during the almost uncontrollable uproar of the pandemic and the application of strict quarantine restrictions.

“With such market activity, it is possible to make assumptions about the spring effect, when buyers buy a home so far, and about market overheating, when a large number of buyers made the decision to buy a home under existing conditions.” says TS Kvainickas.

In fact, both assumptions can be argued. Quarantine has become quite a common phenomenon for the public, so people’s freedom of choice is no longer restricted. The expected fiscal stimulus and expected inflation encourage the population to protect their savings in the most acceptable and understandable way: investing in real estate (ER).

Quite significant changes are taking place in the proportion of housing classes purchased in the capital; sales of middle-class homes have increased the most. It is likely that with the significant increase in the importance of housing in 2020, several people have decided to improve their living conditions. More economy class housing has also been purchased than in previous periods (a smaller increase than in the middle class segment), and the purchase of lower total cost housing can be considered a hedge of funds. Prestige homes sold less than in October, but were also affected by the lower supply of this class.

In December 2020, Inreal included 665 new homes in Vilnius in the monitoring, which is double the number in October and December 2019, so the supply on the primary market decreased insignificantly, to 4,551 apartments. On the other hand, more than a thousand of these apartments are reserved, so the actual options are much smaller. Good news for property developers: for the first time since the beginning of the quarantine (excluding March), the liquidity ratio in Vilnius has dropped below the symbolic threshold 1 and currently stands at 0.95. This means that the current supply could materialize in less than twelve months. This value of the indicator was typical in 2019, but due to the June 2020 pandemic it jumped to 1.19 (realization of the supply volume in just over 14 months).

Christmas also came to the developers of Kaunas Real Estate: in December it was agreed to sell 146 homes (after evaluating 6 cancellations), that is, 51 percent. more than in November and even 2.5 times more than a year ago. This number of agreements is not a record, for example, in July 2019 153 homes were agreed for sale, but December is usually much more passive due to the holiday period. Unlike Vilnius, the temporary capital was dominated by sales of exclusively economy class housing, but most of the apartment supply in this segment. In December, Inreal added 220 new apartments in Kaunas to monitoring. That’s three times more than a year ago and a third more than a month ago. The liquidity ratio improved from 1.16 to 1.12. The value of the indicator is still worse than in 2019. On the other hand, just a couple of years ago, an index value of 1.5 was considered optimal for realizing homes in the primary market.

The most anticipated result is in Klaipeda. After agreeing to sell 72 homes (3.6 times more than in November and 44% more than a year ago), it can be said that the primary housing market is also recovering in the port city.

“In addition to knowledge about the planned investments in Klaipeda, a significant positive change in the deals is great news for all market participants, which will have a positive effect in the near future,” says TS Kvainickas.

The 72 agreements are not a record result, the sale of 77 homes was agreed back in February of this year, but that was enough for sales to resist the bottom. This year, the new supply in Klaipėda stagnated, so with the inclusion of 52 new houses, the market activity became more harmonious, buyers have the opportunity to choose not only between the balances but also new projects, and expect many of them in the coming years. It is symbolic that the liquidity ratio in Klaipeda exceeded 1 and is currently at 0.99. This means that the current offering can be completed in just under a year, another push for real estate developers to offer new projects to buyers.