Avulis: The desire of the population to buy a house is currently greater than the risks and fears

Real estate market in 3 major cities of Lithuania

September and October were more fruitful than ever for the real estate market. Lithuanians, who had barely bought anything in the spring, continued to abstain in the summer, and in the fall Lithuanians “rushed in” and broke home sales records. In November, real estate sales decreased slightly, but the volume of new homes sold in the last month of autumn was even higher than in the same period of 2018, when greater confidence prevailed not only due to the income of the population, but also due to the general economic situation of the country. Tomas Sovijus Kvainickas, Head of Investment and Analysis at Inreal Group, provides data on the number of new apartments agreed in November in three major cities in Lithuania.

In November, the purchase of 488 new flats and apartments in Vilnius was agreed (after evaluating 2 canceled deals). This is 25 percent. less than a month ago, but 10 percent. more than in November of last year.

“Obviously, annual sales in the primary housing market will be no better than the 2019 record, but more new apartments have already been sold in 2018, despite two waves of pandemic crises,” says CEO TS Kvainickas .

The real estate analyst continues that the promoters of the capital market have offered 306 new homes in 2 projects. Currently, buyers can choose from just over 1,500 new apartments. Prices, depending on the segment, remain at 3 to 9 percent. increase. The liquidity ratio of the primary housing market in Vilnius is good: 1.09, which means that the new housing on offer could be sold in about 13 months.

November, according to TS Kvainickas, became a record for the primary housing market in Kaunas: 97 apartments were agreed (after evaluating 4 canceled deals). That’s double what it was a year ago and 59 percent. more than in October. Numerous sales are related to the new monthly offer: 164 homes in 4 projects. This is the highest monthly supply in 2020.

“Can it be said that Kaunas has finally” rebounded “? Probably yes, but as long as this outbreak is sustainable, it remains difficult to answer. The success of the recovery trend will be demonstrated in several months and the country’s efforts to cope with the pandemic, “says TS Kvainickas.

A total of 746 new apartments are currently on the main housing market in Kaunas. The liquidity index in temporary capital remains the same as in October – 1.16, that is, housing in the primary market could be sold in the next 14 months.

According to the interlocutor, the primary market in Klaipeda is relatively calm. Sales, which fell sharply in March, have yet to recover. In November, the purchase of 20 homes was agreed (there were no cancellations): “This is a result similar to last month, but 50%. lower than last year. The new real estate market in the port city is as shallow as ever. We have not registered new projects for four months in a row. The offer was reduced to 370 homes. The liquidity ratio in Klaipeda is currently 1.11, meaning the newly built apartments on offer could be sold in just over 13 months ”.

Buyers’ desire to buy outweighs fear

According to real estate agency Hanner, a total of 559 new apartments were sold in Vilnius in November this year, representing 46 percent. more than 2019 in November, when 382 newly built apartments were sold in Vilnius. Do not forget that part of the offers may be those buyers who wanted to buy a home in the spring, but waited because there was no guarantee that their income or economy would be affected by the coronavirus. It is true that, according to the company’s calculations, 4167 newly built apartments were sold in Vilnius in 11 months this year, representing 18 percent. less than during the same period in 2019, when 5,104 apartments were sold. However, this year it has sold 15.7 percent more than during the same period of 2018, when 3,601 newly built apartments were sold in Vilnius.

“Despite the announced quarantine, the property market reacted cautiously and sales of new apartments in Vilnius in November were better than expected. The desire of residents to buy a home is currently greater than the risks and fears of the situation. from the coronavirus, ”says Arvydas Avulis, Chairman of the Board.

According to the company’s report, buyer activity has been increased this year by the fact that the number of unsold apartments on the market has been steadily declining since May. In May-October, the supply was reduced by up to 12.3 percent. The month of November is characterized by the fact that the moderate decrease in supply was replaced by the growth in supply: at the beginning of December, 4,544 apartments were not sold in Vilnius.

Residents respond less to the second quarantine

Šarūnas Tarutis, head of investment and analysis at real estate company Citus, says that after the announcement of the second quarantine caused by the coronavirus, the market contracted by a fifth, but the effect was far from as strong as in the spring , and the result of the primary market remained high. Company analysts estimate that, according to preliminary data, 504 new homes (both apartments and cottages were booked in Vilnius in November, Inreal data presented above shows the situation only in the apartment market). This is more than in the penultimate month of last year or the year before: 2016 reserved 496, 2018 – 393 new homes. More importantly, it was more than during the first month of quarantine: in April this year, new home sales were less than a hundred.

“Every year, from November to December, we observe a cyclical contraction of the market. Therefore, considering the second quarantine announced, the situation is completely normal. It is very gratifying that this quarantine has so far had a much less impact than the first, but we are seeing some changes in customer behavior. For example, movement and communication restrictions have significantly increased decision-making time. On the other hand, people are used to remote communication means, they value its convenience and efficiency in a similar way to direct media, and this is a very good sign that allows them to move forward in life, ”says Š. Tarutis.

Tomas Sovijus Kvainickas, Head of Investments and Analysis at Inreal Group, adds that when analyzing the state of the primary housing market, there are currently a number of canceled deals. According to him, at the beginning of the pandemic, the number of cancellations increased dramatically and perfectly illustrated the uncertainty in the market about the future.

Meanwhile, during the last two months (October and November) the number of cancellations in Vilnius has dropped to the pre-pandemic level, in Klaipeda we have not registered cancellations for three months, and in Kaunas, although there are still more cancellations than usual, the situation is clearly improving, ”he added. says real estate analyst.

On the other hand, according to him, in times of crisis, the greatest challenges are faced by economy class housing, both due to the financial sensitivity of its owners and due to the less attractive housing in the market.

“Although total sales of economy class homes have recovered, they have represented a smaller share of total sales in recent months and have given way to middle class homes.” It can be assumed that the future expectations of the most financially sensitive buyers are still affected by the threat of a pandemic, and those who can buy a more expensive house or want to rent it are choosing slightly better apartments both for their own comfort and with the hope for better liquidity in the future ”, says the analyst. .