Lithuanians bought these houses more before quarantine: the pandemic took a significant hit

Homeownership is the most popular.

When discussing the impact of the coronavirus pandemic on the property market, real estate experts often look at the primary property market: new-build property sales and price changes. However, it should be noted that a very important part of the property market throughout Lithuania is the secondary property market, the property market, which already had an owner.

Paulius Rudzkis, data analyst at the Records Center, explains that in individual municipalities in the country the share of the primary and secondary housing market differs, for example, in Vilnius every third apartment purchased last year was of newer construction, i. The transaction concluded less than two years after the completion of its construction. In Kaunas or Klaipėda, where the supply of newly built apartments is less than in the capital, this proportion is lower: every fifth apartment purchased is of newer construction. However, looking at the secondary housing market in Lithuania as a whole, it can be seen that it is not inferior to and even superior to the primary one.

“Regarding the situation throughout the country, it can be said that in the secondary housing market (apartments and residential houses) in 2019. a total of 38.6 thousand transactions were recorded. Buy and sell transactions. Compared to the new housing transactions, where a little more than 9 thousand transactions, that’s four times more. Therefore, in summary, it can be stated that the secondary housing market in terms of the number of transactions completed and registered last year continued significantly exceeding the primary market ”, says P. Rudzkis.

Antanas Kišūnas, head of the Housing Department of the real estate company Ober-Haus, also ensures that the secondary housing market transactions make up the majority of the buying and selling transactions in Lithuania. According to him, the volume of housing transactions in the secondary market largely depends on the supply of the primary market.

“In the secondary market of the Vilnius secondary market, in 2018–2019, the average share was 65 percent. It fell to 55% in the first half of this year, but mainly due to the record of previously agreed apartment transactions, which had already been agreed (for example, in 2019). At Kaunas in 2018-2019, it accounted for about 82 percent. or 2020 I push. they accounted for 72 percent. In Klaipėda, in 2018-2019, around 90 percent, and in 2020. I push. in the port city they represented 88 percent. Competition for the secondary market in the primary market consists mainly of Vilnius and Kaunas, as most of the new construction projects are taking place there, ”A. Kišūnas shares the statistics.

According to A. Kišūnas, the property in the secondary market is very diverse: from a small apartment in a bedroom house to luxury apartments in the central parts of cities, therefore, the buyers of such property are very different.

“But if we talk about the most popular and most purchased real estate of this type, we can safely say that the best sellers are apartments in old and old houses and second-hand houses. Such property is bought as the first house that will later be converted In investment real estate, it is a family home for people with low and middle incomes. In addition, with the high demand for apartment rentals in the main cities of the country, apartments in old houses are often bought for investment. It is not uncommon that purchases are made even without bank financing ”, explains the interlocutor.

The real estate specialist continues that secondary market housing, especially the economy class, has always been in high demand, and in recent years, demand has been growing, with the exception of the pre-quarantine period this year. .

“Such growth in Vilnius, Kaunas and Klaipeda was mainly influenced by the growth of personal income, the increasing number of permanent residents in the mentioned cities, the need to acquire investment real estate and the difference in secondary market prices, the “Most popular real estate compared to the primary market. Meanwhile, in the regions, buyers simply did not have and had no choice but to buy a house on the secondary market or build it themselves,” says the interlocutor.

According to A. Kišūnas, if we look at the offer of 1-2 bedroom apartments before the quarantine of the most popular and demanded objects and compare it to the demand, we will see that the offer was even slightly more modest. This also led to price changes.

“Liquid housing on the secondary market at market price sold fairly quickly. And that adjusted the prices of the house and it adjusted them ”, says the expert.

Due to the quarantine, it was an “obstacle” for everyone

Older construction homes also declined in popularity in 2020. P. Rudzkis, data analyst at the Records Center, estimates the total number of transactions for older construction homes before quarantine this year (in January-February) it was almost a tenth higher and amounted to 5.8 thousand. However, the coronavirus pandemic significantly adjusted sales of new and old construction properties. According to P. Rudzkis, when evaluating the proportion of newer and older construction housing transactions in Lithuania, new trends emerged: the proportion of newer construction housing transactions increased and the proportion of older construction housing transactions decreased in consecuense.

“The three-month quarantine in the country certainly affected the real estate market: in the first few weeks it can be said that the recording of real estate transactions almost stopped, then gradually began to recover. As mentioned, in 2019. Throughout the In the country, three-quarters of all transactions were in old (secondary) housing. At that time in 2020. both before and after quarantine, we see that the proportion of old housing transactions has decreased and is only two-thirds east year, ”explains the data analyst, adding that compared to the most recent home transactions, the introduction of quarantine had a greater negative impact on older home transactions.

According to the Records Center data, in March-June, a total of 8.5 thousand, or even a third less than in 2019, transactions of the oldest construction housing in Lithuania were concluded. during the relevant period. At that time, the number of new housing transactions increased by one-tenth during the comparable period. The reason for this, according to P. Rudzkis, may be in part that in March-June, transactions concluded before quarantine were still recorded.

“This does not mean that the quarantine has not affected the primary real estate market. Due to the longer transaction process (which lasts from 6 to 9 months), this effect may be reflected later,” says the analyst.

According to Antanas Kišūnas, head of the Ober-Haus Housing Department, the quarantine hit the entire property market, without exception. Due to the unprecedented overall situation, some home sellers either failed to take action or interrupt the home sales process, and potential buyers were unable to fully inspect the property and complete other acquisition processes due to quarantine restrictions, the Center’s paralysis. Registry and notaries. Calculate the changes in the number of transactions in three large Lithuanian cities, where not only the old but also the new construction market is active under normal conditions.

“The number of transactions in the secondary market in Vilnius, Kaunas and Klaipeda decreased 2 times since the announcement of the quarantine until the end of May, while the number of transactions in the primary market decreased up to 9 times,” said the interlocutor.

Prices are freezing, supply has fallen

According to A. Kišūnas, during and immediately after the quarantine period, the supply had decreased, but was determined by psychological factors, fear, and people’s ignorance. Another reason for the decline in supply may have been the sellers’ decision not to sell the property after realizing that they would not get the optimistic price they might have expected if the pandemic had not started and price growth did not continue. would have stopped.

“However, it was not such a massive phenomenon that we could conclude that the quarantine significantly reduced the supply of housing in the secondary market,” said the interlocutor.

A. Kišūnas notes that after the quarantine is lifted, activity on the secondary market gradually increases for both sellers and buyers, but the price increase is not yet noticeable.

“In the country’s largest cities, the price increase is calculated from the announcement of the quarantine to now ~ 0.1 – 0.3 percent, while in January and February 2020, the sale prices of apartments (old construction and new) in the main cities of the country increased by 0.5-0.6 percent tempo. The strict bank loan policy also contributed a lot to this, “calculates the real estate specialist.

P. Rudzkis, a data analyst at the Records Center, is also noticing the increasing activity in the real estate market. According to him, the record of sales of apartments did not decrease in June, the residential market continued to grow slightly. On the other hand, relatively little time has passed since the end of the quarantine, so it would still be difficult to properly assess the real estate market today.

In terms of prices, according to the Records Center, in the first quarter, an average of 977 euros per square meter. meter, or a third less than for new apartments. At that time, earlier this year (before quarantine) an average of 450 euros per square meter. meter, or almost half less than for newer residential buildings. So far, there are no significant price changes that are very favorable to the buyer.

“It just came to our attention then. For example, the prices of the oldest building apartments in all of Lithuania in the second quarter of this year, compared to the same period last year, increased by 5%. This growth is the half the annual growth in average prices for the oldest apartments in the country seen in the first quarter. Similar changes can be seen by looking at the average prices for older homes, “explains P. Rudzkis.

Ober-Haus real estate expert A. Kišūnas also says that no significant price changes have yet been noticed in the property market.

“It can be said that the prices of the primary and secondary real estate market are” frozen “at the pre-quarantine level, there have been no significant changes in prices,” says the interlocutor.

When asked by Delfi Būstas what changes we can expect in the secondary real estate market in the near future, A. Kišūnas emphasized that it is very difficult to forecast, because the situation will depend on several factors.

“It is very difficult to predict what will happen next.” If everything goes according to the current scenario and there is no second wave of quarantine, then we can probably return to pre-quarantine activity after 8-11 months, and if repeat the March scenario, there will be many unknowns in the entire real estate market, “he explains.

P. Rudzkis also vaguely drew the future: “It is very ungrateful to forecast in this period full of uncertainty. The start of the quarantine in the real estate market has caused a lot of confusion: buyers have changed their priorities, credit institutions have revised their lending policies, and real estate developers have adapted to changing conditions. Future scenarios will mainly depend on global trends and whether we will have a second wave of the coronavirus in the country and how it will affect the expectations of the population. “