Record apartment sales in Lithuania: residents who have saved considerable sums buy a second or a third

“You can say that instead of saving in a bank account or a savings book, people started buying apartments. In the hope that they can live off the rent or in the hope that the value of the money they earn will be preserved, ”says Elena Leontjeva, president of the Free Market Institute of Lithuania.

According to Tomas Sovijus Kvainickas, Head of Investment and Analysis at Inreal Group, real estate is perceived, at least intuitively, as a safe investment.

“In the best of cases, I will rent it, I will leave it to the children, I will resell it and I will earn with it. It is very possible that I have bought it now, and then I will think of what to do with that department,” he considered.

Accumulated savings

Surveys conducted a year ago showed that only one in two can earn a living from savings for a few months, and the quarantine has shown that this is not the case. Frequently asked what they live on, said: savings.

Lithuanians have not saved much for a black day. In 2018, according to data from central banks, it was estimated that on average each Lithuanian had about 3,000 euros in savings, life insurance or self-financed pension funds.

According to SEB bankas, during the last year Lithuanians have deposited more than 3 billion in accounts.

According to SEB Bank economist Tadas Povailableuskas, tough times are significantly changing people’s attitudes towards their savings.

“The pandemic has forced many people to be frugal. It was probably not the choice of the people themselves to be frugal, as some did not know where to spend that money. As a result, we have a significant increase in money in the accounts, ”said T. Povilauskas.

According to E. Leontjeva, president of the Lithuanian Free Market Institute, Lithuanians are generally frugal.

“Lithuanians are really frugal and even in Soviet times, when there was high inflation, the devaluation of the ruble, we saw that our ancestors, who seemed to live very modestly, all had saved a certain amount,” he recalled.

Prices like a decade ago

Experts say that at first glance, housing may seem difficult to afford at the moment, since its prices are not much lower than in 2007-2008. It is true that the interest rates on loans are more than twice as low. Now people pay much lower premiums for a mortgage.

“More and more buyers are buying second, third [būstą]Because those who bought in the 90s, when prices were much lower, used to be able to pay off loans and buy a second home, ”says T. Kvainickas.

The large number of real estate transactions is believed to be partly due to the rising birth rate or the number of Belarusians arriving and staying in the country. The capital has a record number of people between the ages of 35 and 45. According to T. Povilauskas, they can buy their first or second homes or improve existing living conditions.

“People see that the real estate market has started to go up in price, and this confusion is encouraging those who are thinking of buying a house in the future to hurry. If you plan to buy in 2-3 years, but the house is 10 percent expensive, nobody wants to pay more if there is the opportunity to buy that house now, “explains the economist from the SEB bank.

Dramatically inexpensive

Rising real estate prices always cause a chain reaction: other goods become more expensive, resellers begin to actively buy apartments. However, experts say that property prices have not yet risen to such a height that they should be alarmed.

Apartment prices in Vilnius districts such as Pašilaičiai or Šnipiškės are not expected to increase dramatically, but if the supply of new housing in the capital decreases, apartments in the Old Town and Žvėrynas will become more expensive first. Still, experts believe that demand will continue to fall.

“I don’t think we’ve gotten to the point where 1000-900 apartments a month is the new rate.
It may be sold this year, but sometime next year the amount of demand will decrease again, “thinks T. Kvainickas.

The situation in Kaunas is much calmer than in the capital. Here 116 home sales were agreed per month and 67 new homes were added to the market. The purchase of 36 houses in Klaipeda was agreed and there is a symbolic increase in the supply of 16 new houses.