Changes in apartment rental prices – a puzzle for the experts themselves: they cannot agree on what led to such amounts

Eloquent home rental statistics

In the spring, during the first quarantine, it wasn’t just home sales that fell. The rental segment also reacted to the change in the situation in the real estate market. According to data from the real estate listing portal aruodas.lt, during the first quarantine, apartment rental prices in Vilnius and Kaunas decreased, but, as the representative of the portal Viktorija Steponavičiūtė emphasizes, they began to rise in the second half of the summer.

“In autumn and specifically now, the average rental price in Vilnius and Kaunas is higher than in summer: it increased by 5%, respectively. In Vilnius and 3 percent. Beautiful. This autumn a higher amount is requested for rent. than at the same time last year: in Vilnius the sale price is approximately 2 per cent higher, in Kaunas it is approximately 10 per cent, in Klaipeda it is 2 per cent ”, calculates V. Steponavičiūtė.

A representative of the portal Aruodas.lt highlights several trends in the current rental market. First, the current supply is around 3 percent. higher than a month ago, so it did not decrease, but not as high as in spring or early fall (the highest supply of apartments for rent was in May, June (then growth was up to 50% or more) ), as well as in August, September (about 30 Now the offer is about 16% higher than at the same time last year.
V. Steponavičiūtė goes on to say that currently rental ads are really interesting for search engines. This year, apartment rental ads were seen nearly a quarter more than in the same period last year: In October, the average number of ad page views was 6 percent. more than at the beginning of the year, in January. Most of the rental ads were seen in August, May and April.

The average rent for a one-bedroom apartment in Vilnius is 320 euros and for a two-bedroom apartment, 480 euros. In Kaunas respectively: 270 Eur and 400 Eur, in Klaipeda respectively: 220 Eur and 350 Eur.

Explain the growing population and its solvency.

Experts also see changes in the rental market not only compared to the fact that it was during the first quarantine, but also remembering the same period last year. Sigismund Mauricas, an economist at Luminor Bank, says that long-term rental prices in Lithuania have not only stabilized, but have also increased slightly compared to the same period last year, when the rental market situation in other Baltic countries is much worse. Residents offering short-term rental apartments are in a different situation. For this rental segment, according to Ž. Maurico, it is not easy to shine in the long-term rental market because some apartments for short-term rental are not suitable for living longer. Also, short-term rental apartments are often located in the central part of the city, so their rental price is higher, and not everyone can afford it. It remains to allow the rental price.

“In the rest of the rental market, there is no price adjustment, no decrease, and this is one of the enigmas why there was no such adjustment, because it was in Latvia and Estonia. Apparently, the situation was largely determined by positive demographic changes, especially in Vilnius. The population of Vilnius, including the district, increased by 10 thousand. This is a fairly large number and there is a lot of pressure in the real estate market, we see that in October the purchase of new apartments was a record, ”recalls the economist.

The interviewee continues that during the pandemic, more people returned to Lithuania than left, and this is one of the key differences between the coronavirus and the financial crisis of 2007-2008. Furthermore, according to Ž. Maurico, the pandemic affected the employment of the population less than expected, especially in Vilnius, where the real estate market is the most active.

“Today, the number of jobs in Vilnius is higher compared to the same period last year. In general, it is smaller in Lithuania, but higher in Vilnius. More new jobs were created. It should also be taken into account Several sectors of information technology have been created in Vilnius, Lithuania has become a leader in IT services export this year, and we have become the leader in financial services exports this year, which is Such an interesting turning point. It doesn’t feel “, explains the economist, adding that the salaries of these specialists are high enough.

According to Ž. Maurico, we must not forget the public sector employees and large companies that provide higher value services, who have kept their jobs and salaries, and specialists who work for foreign companies, but returned to Lithuania during the quarantine and the rented home. It was these neighborhood groups that maintained the demand for rental housing and rental prices, after falling briefly, rose again. Furthermore, the economist sees new future trends.

“These people who work in foreign companies, but live in Lithuania, rent a house here because it is cheaper for them, and they have the opportunity to work remotely, change migration in general, because, for example, a person will work in London or in another city for two weeks and in another two weeks. From home in Lithuania. As a result, the rental demand in Lithuania will only increase, because rent is cheaper here, “explains the economist, adding that other Baltic capitals have lost the flow of short- and long-term tourists, and the number of permanent residents has not increased, which has affected the rental market and rental prices.

Ž. Mauricas says that if Vilnius’ population continues to grow so fast, the pressure on the property market will be very high and the rental segment is no exception.

Statistics: how distorted

If the economist Ž. Mauricas attributes the rise in rental prices to solvent and high-income tenants and the growing demand for rental apartments and population (especially in Vilnius), says Arnoldas Antanavičius, head of Realdata, real estate analyst, distorting such statistics by, that they are closer to the center, so its rental price is higher.

“You have to pay attention to the calculation itself. When comparing the Baltic countries, the average price per square meter is taken. This single comparison of index averages is not always entirely correct. Because, first of all, we must look at what those averages consist of. Perhaps in the case of Lithuania, the rental structure has changed quite a bit this year, when a large number of short-term rental markets came to a halt during the first quarantine, such property is usually located in the old town, where it is more expensive. Such apartments were offered on the long-term rental market and then such a change occurred when a much larger part of the total rental boiler began to consist of such expensive properties in the central part of the city, driving up the price general rental average ”, explains the expert.

The real estate analyst points out that when looking at specific objects, how much they cost before, during and after the quarantine, it is possible that the rental prices have stabilized: “They have not dropped drastically, perhaps there was a period during the first quarantine, when we saw objects specific were around 5-6 percent. cheaper than before the quarantine. In extreme cases, we’ve seen examples of rents negotiated with landlords and negotiated a discount, but we don’t know the statistics on how common this was. But such examples were of those tenants who lost their jobs, lost their income, etc. “

According to A. Antanavičius, the rental market stabilized in the summer, when rental prices returned to the pre-quarantine level, and the average was distorted by short-term rental apartments, which began to be rented for a period longer.

Speaking about the future of the rental market in Vilnius, the real estate analyst is not inclined to predict drastic adjustments in rental prices. According to him, last year’s high population growth in Vilnius is not a guarantee that people will continue to move to Vilnius.

“This year, according to the State Health Insurance Fund, we initially saw a population growth of a thousand per month, but after the first quarantine it was quiet, and now, based on the August data, there is a population growth of around 3,500. Assuming September and October were also growth periods, and growth in November and December will probably slow, I think, to around 5,000. We will see population growth. This is a positive boost for the market, but it is difficult to say how important it will be for the rental market, ”says Antanavičius, adding that it should not be forgotten that quarantine and teleworking have allowed some residents to leave the big cities in general and may the trend continue.