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According to the Department of Statistics, in the second quarter of 2020, compared to the second quarter of 2019, house prices increased by 7%.
Meanwhile, comparing the first and second quarters of 2020, house prices were up 2.2 percent.
The situation is different from the previous crisis
Tomas Sovijus Kvainickas, Head of Investment and Analysis at Inreal Group, is convinced that the belief that prices should have fallen is related to the experience of the previous financial crisis. However, he points out that the situation this year and that of a decade ago differs in day and night.
“In the past, the real estate sector was directly related to the increase in the crisis: excessive real estate prices, disproportionate financing. Now it all started with a health crisis and was later triggered by economic sanctions. In the past, the consequences were clear: the loan to the bank remained high, interest rates went up, I lost my job, house prices fell. Meanwhile, deferrals of contributions were granted, which did not cause panic. Also, it is much easier to have downtime now than it was 10 years ago, “he said.
Photo by Inreal / Tomas Sovijus Kvainickas
Finally. TSKvainickas recalled that the policy of economic promotion is currently being followed, not belt-tightening. This also contributed to the fact that house prices did not fall.
The developers did not apply discounts
It is supported by Karolis Sankauskas, director of Projektavimo sprendimai, who believes that the house price statistics confirm once again that the COVID-19 virus has had a fairly mild impact on the Lithuanian economy, including the Lithuanian real estate market. He points out that in the second quarter, real estate developers were unwilling to make more serious concessions, because after the initial shock, the market was in the mood that the virus would not harm the Lithuanian economy.
“The statistics only confirmed this fact: after the initial COVID-19 shock, consumer confidence stabilized, people tended again to reduce savings and increase consumption speeds, and renewed interest in real estate objects. Developers , seeing the quickly recovered optimism of the population and the good macro indicators of Lithuania, they were also not willing to offer drastic discounts to the market, which is what we see in the statistics, “he explained.
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