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“According to our calculations, 571 apartments were sold in Vilnius in January. … That’s almost 12 percent. More than in 2020 and about 20 percent. More than in 2019. Obviously there is interest in the housing in Vilnius, and the figures themselves say that the demand for housing in Vilnius is growing, ”the businessman told Eltai.
A. Avulis noted that currently “home sales are higher than the rate of construction.”
“The market liquidity index during this period is 8. This indicates (…) that if sales are carried out at the same rate as in January, all the departments and projects that are now announced will be sold after 8 months. This ratio is, it must be said, very low, because the market liquidity ratio is usually higher than 12. (…) If this liquidity is maintained, there may be a shortage of homes on the market in a few months, ”he said. .
According to A. Avulis, the insufficient supply of real estate on the market is currently determined by two reasons. One of them is “the acute and delicate subject of the earth”.
“Until now, it was common for old buildings to be bought and demolished, at least in the central part of Vilnius, and new ones to be built in their place. In recent years, however, the National Land Service (NJT) has embarked on a rather aggressive policy, and if we investors want to demolish an old building and build a new one in its place, NNT is trying to finish the earth. lease. That is why today it is quite risky to buy old buildings and demolish them ”, he assured.
According to the businessman, about 70-80 percent. All real estate projects in the capital are being built on land leased to the State. According to A. Avulis, as a result, two-thirds of all projects are at risk of being undeveloped.
“Obviously, when risk increases, (…) the supply of the projects themselves decreases. And there is no possibility of simply buying that land, nor of renting it. The only niche is how to get there: buy old buildings, ”he said.
The second reason that hinders faster development of real estate is bureaucratic obstacles, said A. Avulis.
“Another reason is the increase in bureaucracy in Vilnius city municipality. In the last six months, Vilnius city policy has changed, (…) that is, significantly more restrictions have appeared, coordination of projects is stagnating, ”he said.
According to A. Avulis, if supply cannot catch up, real estate prices are in danger of rising.
“During the last 5 years, prices in Vilnius have grown by an average of 5-7 percent. by year. At the moment, considering that the supply does not reach the demand, and considering that these trends have been going on for several years, there is a very high probability that real estate prices will rise this year ”, he assured.
Real estate prices are also rising due to rising construction costs, the businessman said.
“Construction costs are also increasing because there is a severe shortage of construction workers. Previously, before the pandemic, almost more than half of the workers in Ukraine and Belarus worked in construction. Now it is much more difficult to get the workforce out of there. This is likely to further increase the cost of construction and, at the same time, house prices, ”Eltai said.
However, A. Avulis noted that middle-class housing is currently the most popular.
“The highest demand and highest sales are currently seen in the mid-range segment. These are homes with a price per square meter that ranges between 1,800 and 2,700 euros. Up to 1800 euros per square meter. We call the meter an economic segment, ”he said.
According to the businessman, a few years ago housing was sold more frequently in economic class, and this change was determined by the improvement in the financial situation of the capital.
“Vilnius has the highest salaries in Lithuania, (…) they are increasing every year, so the layer of Vilnius residents who have more income and as a result can buy a better or better located house, is also increasing. . In general, this middle-class house is closer to the center of the city, which makes it more expensive. For many buyers, it is now more important to live in a place closer to the center and not to buy the cheapest house, but perhaps the one that best suits their needs, ”said Eltai.
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