Why are apartment prices in Lithuania rising and what does it mean for buyers?

Real estate prices in Lithuania: current status

Housing prices in Lithuania continue to rise. Representatives of the country's Central Bank emphasize that the current value of real estate, in their opinion, is overcrowded and overvalued by about 7%. What can this imply? Should we expect a bubble in the market that may eventually burst, or are we witnessing a genuine rise in real estate values? We will try to answer these questions together with an expert, realtor of Domlidera Victoria, who will share her rating of the most attractive housing for those who are thinking about buying an apartment in Lithuania.

Realities of the Lithuanian real estate market

What are the actual conditions in the Lithuanian real estate market? What is the participation of local investors and are foreign investments possible at the moment? What is the reason for the achieved level of apartment prices and why do they keep rising? And finally, what steps should an ordinary buyer take in such difficult conditions? Victoria from Domlidera has already commented on these questions.

Market dynamics

- The real estate market in Lithuania is currently showing very active movement: there is an increase in both supply and demand. We are seeing a so-called “seller's market”, where housing prices are rising and demand is increasing much more, while the choice is becoming increasingly limited. Changes in this situation are unlikely in the coming months.

Current trends in the real estate market are largely due to the effects of the pandemic. Long restrictions on movement and travel have caused leisure and recreational needs to begin to concentrate domestically. Moreover, in the face of uncertainty, many entrepreneurs have begun to rethink their strategies and have directed their attention to domestic markets.

Increased demand

This resulted in an increase in interest in buying and renting residential real estate. It is noteworthy that markets of small towns started to develop much more actively.

Growth of prices per square meter

At the moment, the cost per square meter has reached the highest values for the last thirteen years. This rapid growth was recorded in just six months, which is really impressive. According to official data, last year the price per square meter in the Lithuanian real estate market increased by 14-21%. In major cities, there is a record price rise:

• In Vilnius - by 22%
• In Kaunas - by 20%
• In Klaipeda - by 18%

Average housing cost

- Currently, the price per square meter in Vilnius ranges from €1700 to €4500. If we consider the averages for quality housing, the average cost is approximately €2500 per square meter.

Market stability and forecasts

Thus, the housing market in Lithuania is at an active stage and many factors influence its development. It is important to note that despite the general fears about the possible formation of a “bubble”, the current situation seems to be quite stable. Interestingly, the growing demand for real objects and high activity of buyers may contribute to keeping prices at a certain level.

Recommendations for buyers

In conclusion, if you are planning to buy an apartment in Lithuania, it is extremely important to carefully analyze the market and follow its changes. In addition, Victoria emphasized that even if prices increase, it is possible to find affordable housing if you take into account the specifics of particular neighborhoods and the opportunities they offer.

By paying attention to detail, being knowledgeable about the market and understanding your real needs, you will be able to make an informed choice in the current economic climate.

Changes in house prices in Lithuania

To better understand how real estate prices have changed, it is worth noting that just a year ago in Vilnius the price per square meter was approximately €1000, while two years ago it was even lower - about €850. In Kaunas, prices range from €1200 to €3500, with quality housing costing on average about €2000 per square meter.

In Klaipeda the price ranges from €1200 to €2500, in Palanga it ranges from €1700 to €6000, and in Shventowe the rates range from €1300 to €3000. In cities with district status the cost starts from €850 and reaches €1100. Comparing the current situation with last year's data, it can be seen that in the district towns prices ranged from €300 to €650.

Reasons for the rise in housing prices

The rise in housing prices is due to many factors. Lithuania, like other countries, is subject to influences such as:

• rise in the price of construction materials;
• increase in the labor force;
• increased demand for housing;
• lack of available land for development.

At the moment the cost per square meter in the primary and secondary markets is equal, which is explained by the fact that differences in prices depend more on location, quality of buildings and the condition of a particular area than on the age of the house.

For example, in the central part of Vilnius the prices for new and secondary housing are very close, as the cost of land plots here is high and the neighborhood is in high demand.

Quality of real estate

The key factor to be relied upon is the followingbuilding quality. If a building has a bad reputation, its value can drop significantly. The same principle applies to new buildings:

• some real estate developers may not use modern technology;
• this leads to lower production costs.

As a result, they offer housing at lower prices, but this does not always reflect theobject quality.

A cautionary tale for buyers

I want to warn potential real estate buyers: low-priced apartments often have questionable quality indicators. The construction market is evolving in step with new technologies, which makes it possible to speed up processes, but the quality of some of the work may still be questionable.

Examples include the environmental performance of buildings and other important aspects. Many construction companies use modern building materials that are considered reputable, but their use can lead to additional costs in the future.

Energy efficiency and quality

For example, the construction of energy efficient buildings requires the use of synthetic insulation materials that do not always provide proper ventilation. In such cases, the lack of quality air recovery can cause increased energy and utility costs.

The real estate market situation continues to evolve, and it's important to pay attention to detail when choosing a home to avoid unexpected complications after the purchase.

Rising prices for construction materials

In Lithuania, as in a number of other countries, there is a noticeable increase in the prices of construction materials. This trend is aggravated by the shortage of wood, which directly affects the increase in the cost of housing.

In addition, there is an increase in taxes, as well as an increase in tariffs for fuel and utilities. All these aspects affect the rise in the cost of various services, which, in turn, leads to an increase in prices per square meter of real estate.

Comparison of secondary and new-build market

In the secondary market, one can find more attractive offers than in the market of new buildings. This is especially noticeable in settlements such as Palanga, where there is almost no land left for new construction.

• Because of this situation, housing on the secondary market will continue to maintain high rates.
• Do not expect prices to go down.
• New residential complexes often appear outside the usual locations for residents or on the outskirts, which makes them less attractive to potential buyers compared to existing facilities.

Investment preferences of local residents

Local residents are actively purchasing apartments and houses in the hope of protecting their savings from high inflation, which has currently reached 4%. In such economic conditions, Lithuanians consider real estate as a reliable way to preserve their assets.

Prior to February 2022, many people were keen to take advantage of mortgage lending, believing that inflation would help reduce the real cost of debt.

Planning for company growth

In recent times, many businesses have been actively planning their growth, developing new production facilities or rebuilding existing ones. They are opening new offices, establishing representative offices, launching production lines and expanding their plants. At this stage, they are looking for suitable land plots or leasing commercial space. Interestingly, there is also coverage from investors in the rental business, including properties such as hotels and apartments.

Despite the various constraints caused by the COVID-19 pandemic, this segment of buyers continues to be dynamic in the real estate market.

Difficulties with foreign buyers

Unfortunately, ordinary foreign buyers planning to purchase one or two apartments for rent or for their own residence have almost become a rarity. Although it is possible to execute transactions remotely, such purchases without a preliminary inspection of the apartment pose a certain risk.

As a result, there are often inquiries from foreigners interested in selling their property to get rid of their maintenance obligations.

Real estate management

It is important to note that any real estate requires management and constant maintenance, and before investing in such an asset, you should analyze in detail whether such an investment will justify expectations. It is impossible to simply buy an object and leave it uncontrolled without thinking about the purpose of the purchase. Today, almost all properties require regular maintenance, upkeep of the surrounding area and payment of utility bills.

Property maintenance incurs costs, regardless of the type of property.

Interesting new buildings in Vilnius

Now I would like to highlight three of the most interesting new buildings in Vilnius. The first one is a condominium located in the immediate vicinity of Vilnius, priced at €189,000.

• It is a two-level house of 135 square meters and construction began in the summer of 2021.
• The complex is a tempting residential project located on the border of a national park and surrounded by a picturesque pine forest on the site of an old manor house.
• In the near future there will be 12 separate houses, each on its own plot of 7.5 acres.

Each house has an area of 135 square meters and allows you to freely change the internal layout according to the owner's preferences. On the first floor there is a common hall, a storage room, a bathroom, a garage and a kitchen with dining area. On the second floor there is a bathroom, three bedrooms and a dressing room. Modern conveniences have not been forgotten: each house will have its own terrace.

Engineering systems

As for the engineering infrastructure, all systems are implemented at a high level. Water supply is carried out through its own well for the entire complex, and heating is organized using geothermal technology and complemented by a carefully thought-out recovery system.

Each house will be equipped with individual purification systems, which ensures a high level of energy savings.A+The main infrastructure facilities of the capital are just 16 kilometers away, and the nearest settlement is only two kilometers from the complex. This project represents a wonderful opportunity to assess prospects in the real estate and investment sector in Vilnius.

Attractive location

In this area, you can find educational institutions, shops, and an accessible transportation network, making it quite suitable for living. Just eight kilometers away is Nemanchin—a small but cozy town with a well-developed infrastructure.

You can get here by public transport (for example, buses or trains) from Bezdonas or Nemanchinas, or by your own car. If you are leaving from Vilnius and going through Antakalnis, it will take you about 15 minutes to get here.

Real estate value

The cost of residential real estate in this area is€189,000This price includes a plot of land and a house with partial finishing. You only need to complete the interior work and arrange it according to your preferences. The specified property comes with10-year warrantywhich indicates the reliability and quality of the proposed items.

Modern apartments in Vilnius

In Vilnius, you can also find a two-room apartment for sale.€85,400This modern apartment has a total area of 68 square meters and is located on the first floor of a five-story building, just ten minutes from the city center. The construction of this residential complex has already been completed, and one of its key features is the presence of a private fenced yard.

Environment and infrastructure

The complex is located near the picturesque Salote and Giluzhis lakes.

• Equipped beaches;
• Playgrounds for children;
• Forest areas with safe playgrounds.

There are also walking trails and excellent ski slopes for winter sports enthusiasts. The convenient location allows for quick access to the center of Vilnius — just in10 minutes by car.

Thanks to the new western bypass of the city, traffic is becoming more comfortable, which helps avoid morning and evening jams.

Modern construction technologies

The houses are built using modern construction technologies:

• Three-layer prefabricated reinforced concrete walls provide strength and excellent thermal insulation.
• A 29 cm thick insulation (non-load-bearing) provides a high level of comfort for residents;
• The apartments are equipped with underfloor heating and an individual consumption metering system.
• Each apartment is equipped with a rotary heat exchanger for effective ventilation.
• Plastic windows with six-chamber frames and three-chamber double-glazed units provide excellent thermal and sound insulation performance.

The energy efficiency of this housing corresponds to the class.A++.

Additional amenities

Another important advantage is the presence of spacious balconies in the apartments located on floors above the first, while the first floor features comfortable wooden terraces that lead to individual courtyards.

Apartment in the historic center

A two-room apartment is also offered in the historic center of Vilnius at a price€134,749It is located on the fourth floor of an old building and has an area of 38 square meters. This offer stands out due to its unique location.

A new generation residential building that features modern amenities offers a magnificent view of the ancient streets of Vilnius thanks to its large windows. Nearby, you can find:

• Bastion of the defensive wall;
• Gates of Dawn;
• Church of Saint Teresa.

This adds additional historical value to the proposal.

Conclusion

In conclusion, I want to emphasize that the real estate market in Lithuania is in a state of constant change, and the current situation requires a careful approach from both investors and regular buyers.

The rise in apartment prices raises many questions, and as I found out during my research, this surge is largely related to the consequences of the pandemic and changes in demand for real estate. We see that the cost per square meter is rapidly increasing, and this cannot help but raise concerns. There is a risk that such a price increase may prove unsustainable, and prices could soon fall.

However, it's not all that straightforward. For some buyers, rising prices may signal that real estate is indeed starting to appreciate, which could be a result of improved quality of life and economic conditions in the country. However, one should be particularly cautious when choosing a home. Affordable prices in the primary market often reflect a decline in construction quality and frequently hide pitfalls, as confirmed by my experience with experts.

Recommendations for buyers

• Carefully study the proposals.And don't rush into making decisions.
• Consider alternative options, such as apartments in lesser-known regions where prices are still at a lower level.

Before purchasing real estate, it is important to consider not only the price of the property but also its quality, as well as the actual cost of maintenance in the future. As I mentioned earlier,Cheap apartments often come with a lot of risks.that may lead to additional expenses in the long term.

Consult professionals, dive into market analysis and housing selection — and let your housing decision be a successful step!