Linas Jegelevičius for the BNN
Lithuania‘s housing market, especially its rent sector, has been shaken by the war in Ukraine. Differently to the expectations, the prices continue edging upwards and those who want to rent a flat in the country’s largest cities, particularly in Vilnius, will likely come empty-handed – most of the properties are believed to have been taken by the displaced people from Ukraine.
The country’s largest real estate platforms and flat rent groups on social media are sizzling – there are virtually no free flats left.
«Hey, what happened? It seems that the proportion of those willing to rent their apartments and those in quest of one is one to nine. This is insane,» says a post on Facebook’s group Butų nuoma Vilniuje be tarpininkų (Apartment rents in Vilnius without intermediaries and brokers).
«The rent prices skyrocketed nearly twice. There are no even crummy Soviet-style flats being offered. Crazy!» says other post.
And those Ukrainians who still pin their hopes on the benevolence of Lithuanians can be very disappointed too – for the same reason.
The post by Dasha, who fled to Vilnius with her mother, father, sister and her two children and a dog, pleas for help.
«We’d like to find a house to rent in Vilnius. However, so far, we’re hearing only «no» – the most shake their heads upon hearing how big our family is. And many do not want to see a dog on their property, although our Alaskan Malamute is very neat, friendly and funny. We really do not want to live off the kindness of Lithuanians and are not expecting a free stay – we guarantee paying rent in time,» says Dasha’s post.
In the afore-mentioned Facebook rent group, acknowledging the difficult situation in the rent market, some gave her advice to look for a property in a smaller Lithuanian town, others suggested to offer much more money to the owners, while some encourage her just to «hang in».
«Indeed, the war refugees are a significant factor to the local real estate market,» Romas Perminas, a broker of 011 real estate agency covering all the Lithuanian seaside municipalities and Latvia on the Lithuanian-Latvian border, told BNN.
«The nearly 50 thousand Ukrainians who arrived here have changed the market, especially its rent segment. Rent prices in Klaipeda (Lithuania’s third-largest city) went up by 15-40 percent, the result of the influx,» he emphasised.
In the long-term, real estate will become again a hot commodity for investment, he says.
«It has always been such in Lithuania, but the Ukrainians will definitely prompt many Lithuanians to consider buying a flat again,» the RE analyst said.
Some of the Ukrainians will likely acquire residential property in Lithuania, too, he believes.
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According to Ober-Haus, a major real estate service operator in Lithuania and the Baltic region, apartment prices in five major cities in Lithuania, Vilnius, Kaunas, Klaipėda, Šiauliai and Panevėžys, increased by 21.1 percent over the past 12 months, marking a record 22.6 percent annual growth in February 2022.
Yet the results of sales in March this year show that the Lithuanian real estate market has somewhat calmed down.
According to the State Enterprise Centre of Registers, the total number of apartments sold in Lithuania in March was 6 percent lower than in March 2021. Meanwhile, the number of apartment purchase transactions registered in buildings older than two years was 10 percent lower this March compared to March 2021. T
«This is evidence that the war in Ukraine has affected activity in this segment of the market, because some potential buyers decided not to buy homes and to wait until the situation is calmer. Looking at the historical data, the overall activity in the apartment market in the country in March remained at a very high level, but fell below the record levels of 2021. As the war continues, home buyers are likely to remain cautious and take a slower than usual decision to purchase residential property. The results of the next few months will give a better indication of buyers’ intentions,» Raimondas Reginis, Market Research Manager for the Baltics at Ober-Haus, told BNN.
The slowing rate of increases in apartment prices in the country’s major cities in recent months also shows that the market is already in a more stable situation than, for example, in 2021, he says.
«Despite the deteriorating economic outlook due to the war, residential sellers remained calm and did not substantially adjust their prices. However, we notice that it is currently easier for buyers to negotiate a better price. If in the past year sellers tried to sell their homes at prices above the usual high prices without any negotiation, it is now much easier to persuade such sellers to reduce their inflated expectations,» Reginis said.
Aurimas Čiagus, Co-founder and Chief Executive Officer of Numai, a company specialising in real estate, appraisers, finance services, says the war reduced flat sales, but not prices.
«In March, we recorded a sharp decline in sales in the Vilnius real estate market – developers sold 4 times less apartments than in February. In the first week of March, the market was completely stopped, but by the end of the month, sales started to recover,» he said.
The data show that 727 new apartments in Vilnius were offered to the market in the first quarter of this year: 559 in January, 134 in February and just 34 in March.
The Centre of Registers predicts that the security situation in the region, which has changed due to the Russian invasion of Ukraine, will affect the Lithuanian real estate market as well. Although this is not yet reflected in the statistics, a decrease in the number of the real estate transactions is expected in the near future.
In the first two months of this year, a total of 19,800 real estate transactions were registered in Lithuania, a decrease of 2 percent compared to the same period last year, according to the Centre of Registers.
The majority of Lithuanians live in their own home. But the share of homeowners is set to decrease due to rising real estate prices and the developing rental market. The government should prepare for this by making renting more affordable for the least well-off, experts say. According to Eurostat data, 88.6 percent of Lithuanians live in their own home, while the rest are renting.
A universal real estate tax from 2022 proposed by the Finance Minister Gintarė Skaistė can also be a factor. The tax rate would be largely symbolic, of 10–12 euros per year, the minister said. The current real estate tax is only applied to properties worth more than 150,000 euros in total.
BNN ANALYSES | New reality check both to Lithuanians and Ukrainians – very few flats left for rent in Vilnius
