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Prices will continue to rise
The beginning of last year was difficult for the real estate market: Home sales came to a complete halt due to the coronavirus, economic uncertainty and the quarantine. However, the number of homes sold in the summer started to rise and in the fall we recorded record months one after another. According to Raimondas Reginis, head of market research for the Baltic countries at real estate Ober-Haus, some buyers were still waiting for the crisis to come, that they would be able to buy cheaper homes, but this did not happen. Housing today is more expensive than a year ago and its price will continue to rise: real estate prices are expected to grow by 6-7 percent this year. According to the expert, the forecasts had to be revised after reviewing the results for January-February of this year. Prices have risen in an instant, and consumer confidence is boosted by rising house prices.
Sigismund Mauricas, an economist at Luminor Bank, also talks about the price increase, adding that this year will be different for the real estate market than the current coronavirus crisis.
“This crisis is unique in that it does not lead to a loss in the housing market, unlike the previous crisis. What caused it? First, residents spend more time at home, travel less, go to leisure facilities, cafes, they see the deficiencies of their housing and want to repair or change the housing itself. Such a factor is present in practically all developed countries. Another thing is that residents work more from home for a while, and work from home it encourages them to have a separate job, perhaps to have more spacious homes, “says the economist about the growing need of the population to change their home.
According to him, another singularity of the coronavirus crisis: the population has more money than, for example, after the economic crisis of 2007-2008. According to the economist, this can be seen in the accumulated deposits of the population in all countries of the euro area. Lithuania is no exception.
What else encourages people to buy a home? Fear of the depreciation of money. In addition, the interest rate is currently low and favorable for the purchase of real estate.
We have entered a period in which some processes are irreversible
According to economist Sigismund Maurice, to understand in detail how the housing market is dealing with the coronavirus crisis and what processes we will monitor in the coming years, it is necessary to examine the housing market in the US.
“We see that the number of real estate transactions in the United States has grown significantly last year, and this year the trend continues. In February, the indicators are slightly worse, probably due to heavy frosts. In any case, sales exceed the levels of the last two years ”, explains the interlocutor.
On the other hand, according to Ž. Maurico, USA, sees some differences between the real estate segments: “The prestigious real estate market is improving, this segment looks better. Mainly because buyers in this segment work from home, they have more financial opportunities. The economic segment is not very prosperous. As I mentioned, low interest rates and favorable borrowing conditions encourage home buying not only in Lithuania. Mortgages are not only not declining, but we are also seeing their growth, we can say that it is exploding some kind of real estate price bubble. This may be the day that house prices drop, but it may not come yet. The question of whether they will decrease at all can continue for a long time. “
According to the economist, this year, in one year, there have been two changes that usually take 10 years: working from home and email have become tremendously popular. trade. According to M. Maurico, these two factors have irreversibly changed the real estate market.
“Why? Will this determine the housing market? Housing may not be built closer to work, but in a comfortable place to live. These trends are very visible in the US New York people, who It is a big and noisy city, travel south, to the southern states with good weather, cheaper real estate and more greenery. Because what a difference where to live if you work from home. Later, the population can be migrated by service providers, catering establishments, etc. Then it is possible that we have a completely different demographic situation when people move from the city to the town ”, considers the economist.
In Lithuania, according to Ž. Maurico, we can see these trends at the seashore. For several years now, Klaipeda, Palanga and other coastal cities have been growing, so a pandemic and quarantine can be a great opportunity to attract not only settlers, but also promising new specialists to the coast. The economist also notes that life on the road is becoming more popular, with more and more people looking for their own homes or land. It is the sales of this property that increased last year, also this year, and the sales of apartments, considering the whole of Lithuania, have fallen a little. Larger and more spacious homes are also becoming increasingly popular.
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