The country has an incredible leap in housing supply: prices are falling, people have a choice | Business

The real estate company Resolution has had the offer since the beginning of the quarantine. According to the head of the company Džiuginta Daujotaitė, currently the number of transactions has decreased significantly due to various reasons, the supply curve has become very relevant.

“We are constantly monitoring what is being offered to buyers / tenants and how supply is growing or decreasing in different cities and in different segments. We captured the largest portal currently operating in Lithuania, Aruodas.lt “, – 15 minutes she said.

In different cities, both rental market participants and those who have made sales behave differently.

The biggest increase in supply is in Vilnius.

According to Resolution, most of the new ads appeared in Vilnius. In seven weeks, they increased by 80 percent. and 820 new apartments were offered for rent in the market.

According to D. Daujotaitė, there are the most purchased investment houses in Vilnius, hoping to receive income from short-term rentals. It is true that a large proportion of them buy with a bank loan, so owners are important to receive income affected by quarantine.

“As a result, these homes have been converted into long-term leases. We have always said that investing in homes in Vilnius, expecting a return on a short-term rental basis, is extremely risky. This is due to the extremely high number of such homes and the fact that in such cases the performance is low, especially when taking a bank loan for such homes. ” 15 minutes she said.

Kaunas exchanged places with Klaipeda

The resolution estimates that since the start of the Kaunas Quarantine, the number of rental ads has grown by 31 percent. and 556 additional apartments were offered to the market.

“In this case, the Kaunas market did not expand in the central part of the city, but rather in residential neighborhoods (country houses, individual houses), so the housing market should not have major changes,” D. Daujotaitė thinks.

At that time, the Klaipeda market has reacted very slowly so far, with a change of 17 ads in seven weeks, which amounted to 7%. Increase

“We believe this is due to extremely favorable conditions for the Lithuanian coast this year, where most compatriots will undoubtedly be on vacation this summer.” The fact that the houses are not rented for long-term rental may be a tendency to rent them in the short term, for the holidays of compatriots ”, the interviewee is convinced.

Monitor the drop in rental prices

According to Marius Čiulada, head of the Old Town office of real estate services company Ober-Haus, the rental market is much more flexible and better responsive to market fluctuations than the sales market. Furthermore, changes that did not exist before are currently being observed.

“Firstly, the supply in the old town has increased significantly, as many owners are switching from short-term to long-term rentals. With the interruption of tourist flows, this segment has been reduced to practically zero. Several members of This business has temporarily adapted their home to the needs of the quarantine, but this is only a temporary solution for a few weeks, which has practically been exhausted, “he said.

According to M. Čiulada, demand is currently unable to react to the increase in supply, therefore, a drop in prices of around 10% is observed, which is not typical for this time of year. in the old town of the capital And in other areas of the city up to 5 percent. prices down.

“The market has become ‘slower’. Tenants are more demanding, they look longer, do not rush to make decisions. In this market, the advantage is obtained with high quality apartments” as for you “, and “Anything that suits the tenant” may not reach his client, “he explained.

In addition, there is a greater drop in rental prices in apartments of older construction or where the furniture is lower, older.

“There is a decrease in the number of foreign workers (Ukrainians, Belarusians) who generally worked in the construction or transport sectors, which is accompanied by a decrease in the demand for housing for them. In addition, some students returned to their villages of origin for the fall, which resulted in a slight decrease in demand in this segment as well. All this leads to a temporary contraction in demand, accompanied by a small drop in prices of 5-10%, “he explained.

See various scenarios

Agota Lukšaitė, one of the founders of the short-term rental management platform Houseys, believes that rental prices should rise with the return of tourism.

“With a large number of apartments leaving or partially leaving for long-term rentals, as well as the closure of some hotels / B & Bs, etc., the end of the pandemic and the return of tourism, rentals to They should increase slightly in the short term. Maybe we’ll even go back to what we saw in spring / summer 2018, “he said.

According to A. Lukšaitė, from 2018 to 2019, an additional 200 new apartments and several hotels appeared in the Vilnius market alone. As a result, supply outstripped demand, despite growth in tourism flows, and short-term tenants had to dramatically beat prices. For example, according to her, in May of last year, the 4-star hotels registered a price of about 50 euros per night with breakfast.

“Although the reasons are different, in principle we can try to compare it very speculatively with the spring of 2018, when a large number of apartments abruptly disappeared from the short-term rental market (for appropriate reasons, they changed to medium-term rent) term rather than short term.) Then the prices of the apartments increased from 20 to 50 percent. Of course, the situation is not the same, so we cannot guarantee exactly that market change. account the international and local forecasts of tourist flows and assess the situation in this context. ” 15 minutes she said.

According to A. Lukšaitė, after the end of the quarantine, two scenarios can occur. Opening national borders and promoting tourism could lead to a wave of tourists. However, with less supply, short-term rental prices would automatically increase.

“We have heard of Booking.comPeople are more likely to book apartments than hotels because it provides more privacy. Therefore, we can predict that the apartments will be filled first and then the hotels. Because of this, I think people who can’t find an apartment will take over the hotel. Or vice versa, depending on the first option, “he said.

However, if the second wave of COVID-19 begins and countries will gradually open their state borders, according to A. Lukšaitė, there will be no sudden influx. As a result, prices are not expected to rise en masse, and supply will be able to grow with demand.

“The entire tourism industry has been hit hard, not just short-term rentals, and its recovery is very difficult to predict. The European Travel Commission predicts that the recovery will only start in early 2021 and the recovery before COVID only in 2023.

So all we can say now is speculation, based on the available statistics available, ”he summarized.