Buyers Show No Interest in Overpriced Housing
The Ober-Haus Apartment Price Index for Lithuania (OHBI), which captures changes in apartment prices in the five largest Lithuanian cities (Vilnius, Kaunas, Klaipėda, Šiauliai and Panevėžys), remained unchanged in September 2023 (August 2023 figures had shown 0.4% growth). The overall level of apartment prices in Lithuania’s major cities grew by 2.6% over the last 12 months (an annual growth of 4.9% in August 2023).
In September 2023, Klaipėda, Šiauliai and Panevėžys recorded 0.2%, 0.3% and 0.4% growth respectively, and the average price per square metre rose to EUR 1,613 (+3 €/m²), EUR 1,103 (+3 €/m²) and EUR 1,078 (+4 €/m²). Meanwhile, in Vilnius and Kaunas, the average price per square metre decreased by 0.1% month-on-month to 2.568 Eur (-3 €/m²) and 1.724 Eur (-2 €/m²) respectively.
Over the year (September 2023 as compared to September 2022), apartment prices grew in all major cities of the country: in Vilnius – by 2.6%, in Kaunas – by 3.2%, in Klaipėda – by 1.6%, in Šiauliai – by 3.7%, and in Panevėžys – by 2.5%.
The stagnation period in the Lithuanian housing market continues. Although the market activity indicators do not show any signs of improvement, the majority of home sellers have not changed their sales strategy but instead, are prepared for a longer sales process. For example, according to the latest SEB Bank survey, 46% of the surveyed population in Lithuania believe that the price of housing will increase in the next twelve months (it was 43% in Q2 2023). This means that almost half of the respondents still expect house prices to increase in the near future. At the same time, there are also a number of sellers on the property market who are currently reluctant to adjust the selling price downwards and are willing to wait for a longer time for a potential buyer.
However, the slowdown in market activity is causing some home sellers to reconsider not only their selling price expectations but also to accept lower offers from potential buyers. Not all sellers can wait for a longer period of time, so we often see cases in the market where sellers in a hurry to sell, will first lower the publicly quoted sale price (their exaggerated expectations) and then have to withstand pressure from potential buyers for additional price reductions. Currently, those who want to sell in a hurry have to offer a competitive price, as homebuyers only take a decision to buy a home when they are convinced that the price of the home they are buying is at or even below the market level.
If the overall housing market activity remains at its current low level for an extended period of time, the position of home sellers will be further weakened and we will increasingly see cases in the market where homes will be sold at a price lower than the previously established market level. According to the data from the State Enterprise Centre of Registers, in September 2023, as compared to September 2022, 8% fewer older apartments were purchased in Lithuania, and this is the nineteenth month in a row in which a negative annual change of transactions in this segment has been recorded. The situation in the primary apartment market in major cities has recently stabilised, but the annual sales figures continue to be in negative territory. “According to Ober-Haus data, from January to September this year, the sales volumes recorded in Vilnius were 16% lower, 30% lower in Kaunas, and in Klaipėda they were 27% lower, when compared to the average for 2022” says Raimondas Reginis, Head of Market Research for the Baltics, Ober-Haus.
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