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A year ago, during the first quarantine, the situation was completely different: only 19 percent thought that housing would become more expensive. surveyed population. It is clear that neighbors see or hear that during the first years of the pandemic, contrary to fears, housing has not become cheaper. While the pandemic is not receding and part of the business is still unable to operate, residents do not expect it to have a negative impact on house prices.
A survey commissioned by SEB Bank showed 66 percent. The Lithuanian population surveyed believes that the price of housing will grow in the next twelve months, by 4 percent. believes that housing is cheap, 14 percent. Do not expect changes, and the remaining 16 percent. has no opinion on this matter. The value of the SEB Bank House Price Expectations Index, calculated as the difference between the percentages of those who predict house prices and prices, was 62 points.
In December, the difference was 42 points, compared to -21 a year ago. In just one year, population expectations have reached their lowest and highest levels since such a population survey was launched in March 2012.
In March, the expectations of non-residents in the capital regarding housing prices in Lithuania were the ones that increased the most. For example, in the Vilnius region 60 percent. According to respondents, house prices will increase in the next twelve months, but in the Šiauliai or Panevėžys regions, almost 70% had that opinion in March. surveyed. Of the five largest counties, the outlook for house prices in Lithuania was assessed more modestly by residents of the Klaipėda region: there, 49 percent. respondents thought that house prices will increase in the coming years. Looking at the responses by age, it is striking that up to 81 percent. Respondents ages 18-29 predict that housing will become more expensive. Residents of this age tend to view more expensive housing as a negative message because their access to housing is deteriorating.
The expectations of the population are usually highly influenced by the trends in the real estate market at that time and the prospects of the population and the country’s economy.
The first part does not raise any questions: Lithuania Statistics recently announced that in the last quarter of 2020, the average house price was as high as 9.4%. higher than a year ago. In the first quarter of this year, house prices are also on the rise. According to Ober-Haus, the average price of apartments increased in both January and February, although the quarantine continued despite the ongoing quarantine. The second quarantine so far has had a bigger negative impact only on the number of apartment transactions in certain cities.
For example, the number of registered apartment sales transactions in Kaunas during the first two months of this year was 28%, in Klaipėda – 9%, in Panevėžys – 18%. less than a year ago. However, as in previous years, interest in individual residential houses grew: almost 5% of them were bought in Lithuania this year. over a year ago.
In recent months, the main public attention has been focused on Vilnius’ primary real estate market, where another monthly record for new apartment sales was reached in February. The influx of buyers and the supply of new housing, which has not yet been able to grow with it, creates an ideal situation for housing prices in the primary market to rise even faster.
How quickly real estate development companies will be able to start new projects will determine the rate at which not only prices will grow, but also whether the number of transactions will not decrease in the near future.
The decline in choice can cause a temporary decrease in demand in the primary market. The current rapidly growing demand is forcing these companies to buy land in Vilnius faster, but it is also increasing the price of land and increasing the cost of future real estate projects.
Although the quarantine continues in the country and many people are still unable to return to work, surveys show that the financial situation of the population has not changed substantially since the start of the second quarantine in November.
According to Sodra, the income of those employed in January was about 7 percent. higher than a year ago. Furthermore, during the two months of this year, like last year, more Lithuanians returned to live in Lithuania than left.
Household funds in credit institutions increased by 3.1 billion during the year. and more residents who did not decline were able to accumulate a down payment on a home loan more quickly during a pandemic.
The average market interest rate on new mortgages has decreased during the year. In the public sphere, you can see a lot of expert comments about the increase and, most likely, the further increase in house prices.
Finally, expectations of faster economic growth prevail in the second half of the year, both among the population and among companies. Under these circumstances, it is no longer surprising why residents’ home price expectations have improved so much.
The jump in house price expectations of the Lithuanian population is not exceptional. In Sweden, the SEB Group is commissioning the same survey, the results of which have been very similar since the pandemic: at the beginning of March, Sweden also had 66%. respondents expected house prices to increase during the year.
It should be remembered that during the first quarantine, the expectations of the population also fell drastically in Sweden, which shows that this uncertainty, when the panic began, was characteristic not only in our country, but also in many other countries. Finally, we are seeing a rise in house prices across Europe. In Sweden, prices for apartments increased by 6% during the year and individual houses by 15%.
In Lithuania, the probability of a new pandemic wave and the return of restrictions is increasing. As the direction of house prices has not changed as a result of the first two waves of the pandemic, it is unlikely to change dramatically in the second quarter.
As mentioned, the main focus in the near future will be on the Vilnius region, whether it is observed that due to high demand, the growth of house prices will start to exceed the growth rate of wages and will have a negative impact on affordable housing indicators.
In mid-March, the public opinion and market research company Baltijos tyrimai conducted a representative online survey of the Lithuanian population on behalf of the SEB banks. A total of 523 residents between the ages of 18 and 74 were interviewed. The survey was conducted online in March of this year and in March of last year.
