Reaction to the STOP signal: sales of new apartments stopped, business reservations were canceled

Despite the decrease in sales in March, the first quarter of 2020 maintained excellent results. However, the situation changed in April and sales fell further.

Sold 10 times less in Vilnius

The real estate company Inreal estimates that in April the sale of 51 apartments in the capital was agreed and, according to the developer, 45 apartments were sold in Vilnius. This is 4 times less than in March and 10 times less than in April 2019. In comparison, according to analysts, the number of market reserves of “healthy” new homes in Vilnius was 330 households per month, and in January and February of this year reached more than 600.

In April, the developers introduced 4 projects and 262 apartments in the capital market.

“Due to the high uncertainty, most developers delay the start of new projects, but real estate development (RE) is a long process, so individual projects will still hit the market. Compared to April last year, the price level increased slightly in all sectors. This was influenced both by the change in the supply structure due to new projects and a slight correction in the prices of the existing warehouse, “explained Tomas Sovijus Kvainickas, Head of Investment and Analysis at Inreal Group.

According to Šarūnas Tarutis, Head of Investment and Analysis at Citus, the company forecast an almost identical result in early April, therefore the future forecast is expected to come true and the market will gradually recover.

“Like everyone, we hope the quarantine ends as soon as possible.” We understand that its limitations and the resulting consequences have interfered with normal life, so the sooner it ends, the faster the entire economy will recover. Although no new fundamental data has emerged to predict the situation, positive changes can be expected in Lithuania depending on the course of the epidemic. If the situation continues to move in a positive direction, we will soon be able to predict how the real estate market will behave, ”he explained.

Klaipeda overlooked Kaunas

Meanwhile, Kaunas’ primary housing market came to a virtual halt in April. It is estimated that the sale of 5 new apartments has been agreed.

According to T.S.Kvainickas, in the temporary capital traditionally more attention is paid to individual houses than in Vilnius. Therefore, restrictions on social contacts can further increase the attractiveness of houses and cottages.

“Since buyers show no intention of buying new apartments and developers do not offer new projects, the housing ‘warehouse’ has remained largely unchanged and currently has 812 apartments. Compared to April 2019, prices in the primary real estate market in Kaunas increased 9 percent in all segments, “he explained.

Meanwhile, in April 2020, statistics from Klaipeda’s main apartment market topped Kaunas. However, in the opinion of T.S.Kvainickas, there is little reason to rejoice, because 13 new home sales have been agreed. In addition, in April, developers did not present any projects in Klaipeda, so the new apartment warehouse remains similar: 492 new homes.

“Compared to April last year, prices in the primary housing market in the economic and middle segments grew slightly, while in the prestigious segments they fell,” he explained.

Refuses to housing in the economic segment.

According to data from the Citynow Premium new home search tool, 321 apartments in Vilnius were abandoned from March 1 to May 1. According to Inreal, 28 sales were canceled in the primary real estate market in Vilnius in April, 3 in Kaunas and no cancellations in Klaipeda.

According to T.S.Kvainickas, although the numbers are not great, in case of market stagnation they constitute a significant percentage.

“Among those remembered, economy class multi-apartment buildings and projects dominate, the development of which is still at an early stage, dominate. It should be noted that Inreal does not include reservations in the statistics, so the number of cancellations is likely , including them, could be greater “, he is convinced.

However, according to T.S.Kvainickas, it would be quite speculative to examine the changes in reserves.

“The reservation only shows the buyer’s intention to buy an apartment, but the sales indicators confirm this. There is no doubt that many reservations are being canceled at the moment, but this is a minor indicator and its examination can be evaluated as a hyperbole of the reaction of market participants, “he said.

Sales fell by a quarter

Kęstutis Vanagas, CEO of the real estate development company YIT Lietuva, explained that the work continues on all projects under development. Furthermore, according to him, although a sharp slowdown was felt in the real estate market at the beginning of the quarantine, the company’s total sales in March and April amounted to 25 percent. results for the same period last year.

“Furthermore, we have few canceled reservations: they can be counted on a finger throughout the quarantine period and 60 clients are waiting for preliminary and notarial contracts,” he explained.

According to K. Vanags, although the decisions of customers in Lithuania are affected both by the unclear situation and by the restrictive conditions of the banks, the situation in our country is somewhat different from that of others where YIT operates.

“In other markets, the situation is more active, there is less tension in them, banks maintain the former or even apply additional conditions that facilitate home purchases. In the Czech Republic, for example, sales reach 62%. 2019 level in Poland and 67% in Poland, and colleagues in Estonia are doing well. In Lithuania, we are also seeing a slight increase in the interest of home clients, and website traffic has already almost returned to the previous level to quarantine. Plans for our new projects have been adjusted slightly, but all projects launched will be completed as planned. ” 15min commented the head of the company.

Waiting for better times

Mantas Umbrasas, director of property management for the real estate company Darnu Group 15min He said apartment sales statistics remain unchanged in April, and sales drop dramatically during the quarantine period. In April, it sold five times fewer apartments than in the corresponding period last year. In total, the company reports that it has sold 4 apartments in April.

According to Umbras, it is difficult to predict when the real estate market will fully recover, but it also sees positive signs of market movement.

“There is a clear increase in the number of inquiries received, which doubled in the second half of April compared to the start of the quarantine.” In addition, little by little, clients return to deferred apartment inspections. This means that buyers have not given up on their intentions to buy a home, but are waiting for the situation to stabilize and feel safe in making such a purchase. We are pleased that during the entire quarantine period, only 3 clients canceled reservations due to the changed personal situation, ”he said.

He began to feel interest

Meanwhile, the real estate company Merko did not agree to compare and provide data. According to the company, comparing the number of apartments sold last April and this year would not make sense, because the situation is very different.

“In the first two to three weeks after the quarantine announcement, there were no physical opportunities to show potential apartment buyers, it took time to prepare to work in the new conditions and establish procedures. Only now, with the relaxation of conditions quarantine, the interest of buyers in the apartments begins to feel again. It will only be possible to draw conclusions about the situation and the change in a couple of months, there is still a lot of uncertainty. ” 15min Company representatives responded.

Š. Tarutis, Head of Investment and Analysis, Citus 15min He assured that the company had suspended active sales and advertising throughout the quarantine period.

“During the quarantine, the big buys were postponed for a while. But last week, we saw an update on the ads, seeing a ‘warming up’, a return to interest in projects, and a growing number of inquiries. During that very period short, we had a sale, another reservation should be confirmed by contract in the near future. “People got used to the home and the” survival problems “, got used to the situation and some started to go back a little on their previous plans”, assured.

The real estate company Omberg estimates that 3 apartments were sold in April this year, compared to 32 a year ago. Reservations canceled in April 2020 were 9.

“Plans to buy homes have been delayed by clients directly affected by the economic situation caused by the pandemic and the coronavirus quarantine. In other words, it is mainly people who have lost their jobs.” 15min said Kristina Karbauskaitė, the company’s sales manager.

According to her, the company’s clients had to adapt to the new situation and gave priority to concern for health, the safety of themselves and their families and the formation of a new daily routine.

“Furthermore, for some time access to certain public services was restricted, notaries did not work, etc. Naturally, all these circumstances also affected the real estate market and the results of home sales,” he said.

According to K. Karbauskaitė, during the release from quarantine, 60 percent. higher number of requests compared to the first week of quarantine.

“It is true that the situation in the real estate sector, due to both the new coronavirus pandemic and the quarantine introduced in the country, is still poorly defined.” Any additional change will depend on how long the pandemic lasts, how long the quarantine will last, what measures it will take the state to stimulate the economy and what will be the income of the population, “he said.

A sudden recovery is not expected

According to Julius Dovidonis, CEO of real estate development company Realco, the company sold 3 apartments in April and 57 apartments at the same time a year ago. This year, the company estimates that it has sold 65 apartments, and last year during the same period, 171 apartments. It is true that the company assures that it had not canceled the reservations.

“Both projects were completed and the apartments could be notarized. The quarantine has delayed the signing of notarial contracts, both due to limited opportunities to move abroad and a slower response by banks to loans. Despite the most difficult situation during the quarantine period, we concluded 70 notary contracts of 110 “, 15min he said.

J.Dovidonis explains that he planned the current slowdown.

“Recently, we noticed that the projects are of interest to determined clients looking for housing for life not a year later, but now. “We do not expect a sudden improvement in the situation, even after quarantine, a serious home purchase is influenced by countless factors, and especially by people’s expectations and safety due to the financial situation,” he said.

Edvinas Malevskis, director of the real estate company Rewo 15min He said the company made 4 deals in April this year, up from 37 in 2019. in April

“April this year also affected the property market due to the instability caused by the pandemic. The month was a poor record in terms of sales. It is true that we did not register a significant decrease in the land sales segment, but the group of Buyers in this segment is not great.

Despite the current situation, we are implementing ongoing projects and planning new ones depending on the circumstances. We hope that in the near future the sales dynamics of the Vilnius real estate market will return to the normal pace of the market, ”he said.