TOP10. No room for complaints in the golden age real estate market

A skeptic or pessimist would say it is a party during a plague, and an optimist just rubs his hands. After all, children are also taught in school that if construction takes place, it can be said that the economic circle of the country is doing well.

Saulius Žilinskas, director of Creditreform, warns that real estate has recently become an investment vehicle. This is to protect money that is depreciating due to the pandemic. That is why a lot of money was invested in this sector, where new personnel were hired and salaries were increased.

Omberg, one of the biggest real estate sellers in Vilnius, who paid the second highest salary in the real estate segment last spring, faced a big challenge during the first quarantine and at the beginning of the summer: clients terminated a large number of contracts . However, after a wave of panic and potential buyers convinced that, contrary to some predictions, property prices are not going down, but rising, buyers have come back in force.

According to real estate experts, the impressive jump in home sales in the first quarter of this year can be called a historically successful real estate market. However, if the attitude of the population on the importance of housing does not change, it is likely that the developers and the new supply will not keep up with the demand, which can lead to speculative actions by market participants.

Compared to this year’s record fight a year ago, sales of economy class homes increased by 50%, in the “luxury” class – by 42%, in the middle class – up to 79%, and in the prestigious one – by 5%. The entire “warehouse” in Kaunas was sold in Vilnius in a month. And another “top” of 10 homes.

“These figures in the market are surprising and pleasant, and they signal with red lights,” commented Šarūnas Tarutis, Head of Investment and Analysis of the real estate project management company Citus mentioned in our tables.

According to him, if such market activity remains at current levels for half a year or more, the situation will begin to stabilize: the so-called housing stock will grow and price peaks will decrease. However, if growth remains that strong, the market will start to heat up.

“A vicious cycle is emerging as prices continue to rise due to demand and supply is not keeping pace with buyers.” It is a risk of getting into the bubble ”, Š. Tarutis.

Real estate experts do not hide the fact that such real estate activity already scares developers to some extent.

In particular, 60 percent. sales are recorded only on construction that is still in progress, which means that purchases are made from blueprints without considering the final quality of the product and the reputation of the developer as to whether or not the home will be built. On the other hand, the real estate supply, which is now, is drastically melting. Currently, the activity of buyers is greater than the opportunities of developers. Furthermore, such a flood of buyers distorts home prices.

Tomas Sovijus Kvainickas, Head of Investment and Analysis at Inreal Group, says that in March, which is already considered a record in the real estate market, the record is likely to be broken and developers will try to catch up with growing demand.

“Buyers want not only passive income from home rentals, but also protect their funds from potential inflation due to fiscal stimulus. With more and more people buying real estate, its price is going up and there is an impression that this process may take a long time. Those who hesitate see prices rise, do not resist, buy real estate and further increase house prices due to the changing supply-demand relationship in favor of sellers. The news about the fact that the Property managers and investment funds want to enter the residential sector reach their potential buyers, and their confidence in the growing attractiveness of housing is increasing. There is talk throughout the year of the growing importance of housing due to the pandemic, when residents spend most of their time at home Messages about the importance of high-quality housing that meets the Neighbors’ needs are interpreted limited to the keywords “housing is important,” and the carousel is spinning even more, “commented an analyst from Inreal.