The apartment rental market has seen changes for a long time: an extraordinary summer is coming

The coronavirus is already changing the real estate market, where the short-term rental business has almost disappeared during the quarantine. He, like the beauty salons, hairdressers, and other service sectors whose operations were suspended, lost a total of one hundred percent of his income.

There is no doubt that some short-term rental homes will be added to long-term rental ad listings, and the growing supply should also delight students looking for rental ads in the second half of summer.

Perhaps an exceptional summer awaits future students, during which the owners of the situation, not the owners of the rented home, will be the students, who will have a wide range of options and good negotiating positions.

Abundance of real estate ads

Based on Aruodas.lt According to the information provided, as early as March, 25 percent of the rental ads. more (960) compared to the same period last year, in 2019. In March, said real estate portal registered 750-770 active apartment rental listings.

And real estate rental ads are on the rise: here right now aruodas.lt The portal contains home rental offers uploaded by nearly 1,100 people and nearly 1,600 brokers.

According to Tomas Sovijus Kvainickas, Head of Investment and Analysis at Inreal Group, a price adjustment is inevitable, but right now it is difficult to say what will happen in the summer, when prospective students are actively looking for rental housing.

“It is almost certain that rental prices will fall, at least in the short and medium term. In particular, the coronavirus crisis and its consequences. The flow of foreign tourists has decreased, the demand for short-term rentals has automatically decreased. This The supply of long-term rentals will increase.

If universities continue their distance education, students will not have the goal of returning to higher education, many of them will be able to stay in their parents’ homes, further reducing demand. There are fewer students in the capital already because the conferences are held remotely, and some of the students have lost their jobs due to the closure of restaurants and shops, and the help of parents alone is not enough to maintain a rented house. Therefore, if possible, students return home to their parents, ”said T. Kvainickas, Head of Investment and Analysis at Inreal Group.

According to him, registering specific changes in rental prices so far is also somewhat seasonal.

“When it comes to the market for cheaper or economy-class rental apartments, which are primarily viewed by young students, there are several stages.

The first period is at the end of July, the month of August, it lasts until the beginning of September, it is the period in which the students come to the big cities and at that time most of the rental offers are made.

The rest of the time, for a smaller group of owners. These are hard-working people who have changed their place of residence, young people who leave their parents’ homes and move into rented accommodation, a process that takes place throughout the year.

Prices are falling, so there is no discussion. It is still difficult to accurately identify the change, because each year, each spring, is also affected by seasonality, ”said T. Kvainickas.

According to the real estate specialist, the coronavirus crisis will affect all the main cities in the country.

“As in the capital, in other cities, prices will be affected by the supply of short-term rental housing, part of which is likely to shift to long-term rental.” As for the three big cities, Panevėžys and Alytus, the flow of tourists is not high here, and the number of students is lower. In them, rental prices are already lower, so price changes may be more modest.

The number of tourists and students has decreased dramatically in Vilnius, Kaunas and Klaipeda. Therefore, this change in the price of rent will be the largest in these cities, especially in the capital, where the flow of tourists and students was the highest, “predicts the real estate specialist.

According to the interviewee, it is still difficult to say whether the new announcements on the real estate portals are the impact of the COVID-19 crisis.

“We see that new lease transactions conclude more slowly, ads offer the same lease deals, but so far it is instantaneous information, their number is constantly fluctuating.

Although if there were no announcements in February on the real estate portals in March, today we can see that there are more offers than usual, ”says T. Kvainickas.

Is this a sign that the summer economy class only houses pigs? According to him, this will depend largely on the attitude of the people.

“It just caught our eye then. Those who rented short-term homes had higher annual returns, not all of them tend to abruptly switch to long-term rentals, especially when prices have fallen slightly, as this would mean committing for a year without the option to return to short-term rentals, which generates higher income.

Another approach is that short-term home rentals will not recover quickly, which means that this period can be used for long-term rentals and thus secure some income. Supply is likely to increase further in the summer if more and more people see that short-term rentals do not recover quickly. In this case, the number of long-term lease announcements will only increase, which will affect the price, ”said T. Kvainickas.

Rental housing is estimated to have gained between 7.7 and 9.7 percent annually over the past five years.

According to an InReal spokesperson, such a return would be naive this year. “You can say that the golden age is over, but it is too early to say that it expects a dark and gloomy period,” said T. Kvainickas.

Negotiation calls

Ieva Meilutė, agent of the real estate agency Capital in Kaunas, believes that it is too early to draw categorical conclusions, the quarantine has not yet ended.

“Investments in leased real estate were active both at the end of last year and this year. Some projects will be completed in late spring and early summer, so new announcements will appear on the rental market, primarily on real estate objects around downtown Kaunas and universities.

The number of real estate ads moving from short and long term rentals will increase, and that competition will only increase, which will also affect home rental prices.

To this day, it is still not possible to say that rental prices have fallen, I believe that tenants are trying to adjust the price with the owners during the negotiations, perhaps making a discount in the negotiations. Prices have not changed dramatically in the ads themselves, “said I. Meilutė.

Traditionally, before summer or early summer, the proportion of students leaving rented apartments, returning to their homeland, or traveling to work abroad would increase the number of vacancies. According to the interlocutor, a significant number of owners have agreed that there may be one month of inactivity per year.

“Since the long-term rental market can be supplemented by more vacancies, perhaps lower prices can be expected in the summer. Perhaps this is obviously not reflected in the announcements, but you can expect exceptional prices and discounts in negotiations. They are usually done when long-term contracts are signed. If a student knows that he or she will study 4-5 years in one area, he or she should emphasize that topic when traveling to the department and entering into a long-term contract. So the owner tends to make a bigger discount, ”said I. Meilutė, a Kaunas real estate broker.

According to her, the COVID-19 crisis will not affect the rental of luxury homes, and above all it will affect the economy and middle class rental real estate.

“I think investing in real estate for rent now can only dream of 8-9 percent. Annual return, but we estimate that you can still expect 6 to 6.5 percent. Annual returns. You can say it’s still a safe investment, “said the real estate broker, noting that this period has separated those who are genuinely interested in real estate and intend to buy into the so-called” tourist “inquiries.

“There are still those who can buy, maybe not buy. There is a real circle of potential buyers left, which will make work easier for both us and other market participants,” added I. Meilutė.

In Klaipeda – vacationers who do not cancel reservations and merger prices

Arūnas Bužinskas, a broker for the Memelhaus Real Estate Agency, realizes that the situation has changed dramatically in this period compared to the same period in 2019.

“Last year, there was a strong movement at that time, rented objects were not on real estate advertising portals, this year demand has decreased significantly. Real estate rental ads are on the rise, perhaps young people They are losing income, they refuse to rent, maybe they choose some other options, maybe they go back to their parents to live in. That offer is growing.

I have a specific example: renting a 2-bedroom apartment recently cost 250 euros, now that apartment is already rented for 200 euros a month. Students generally cooperate in two, so splitting costs in half is a good option. The situation in the market has changed, “says the real estate broker.

According to him, in the summer, the short-term rental market will be driven by tourists arriving in the port city.

“In Melnrage, a block of private homes, the majority of the population is engaged in short-term rental, with housing generally booked in advance throughout the summer.

As far as I’ve talked to the owners this year, so far those who have booked for the summer are not canceling their stay. Usually there are regulars who choose Melnrage from year to year. It seems that rented houses in Klaipeda near the sea will receive attention in the summer. Especially if flights do not resume, some tourists will choose to spend their vacations by the sea and come to Klaipeda, ”said Klaipeda Real Estate Broker.

He predicted that in the summer, students will be able to choose cheaper rental housing.

“At least compared to last year, I think this summer the rental prices for economy class apartments will be lower. How much percentage of prices will fall now is hard to say. Those owners who really want to rent will be willing to negotiate, and tenants will also not miss the opportunity to negotiate lower prices. Negotiations are taking place not only for the rental price, but also for the amount of the deposit, “the portal said. Delphi A. Bužinskas spoke.