Citus experts: Housing demand surpasses the results of the past two years – buyers of the economic segment are returning

In the last quarter of the year, the number of new housing units (apartments and terraced houses) sold in Vilnius in the economy class was 50% higher than in April–June, according to preliminary data from analysts of Citus, a creative real estate project development and placemaking company. In July–September, 565 transactions were concluded compared to 376 in the previous three-month period. For the nine months, an even more impressive growth of almost 90% is observed: 1,527 economy-class dwellings have been sold since January this year, compared to 810 in the same period last year.

Šarūnas Tarutis, Head of Investments and Analysis at Citus: ‘The increased ability of buyers in the economic segment to secure financing for new housing has largely driven the growth in demand in the primary market. So far, this growth – in absolute numbers – is not very substantial, but the overall statistical change is already significant. Considering the existing housing demand in the market, the expected further decrease in the Euribor interest rate, increasing wages and stable housing prices, we predict that this positive trend will continue in the near future’.

The indicators monitored by Citus analysts show that demand has also grown in other segments. For example, the demand for medium class housing rose by 22% in the last three months (from 227 to 277 transactions), while the demand for premium class housing grew by as much as 69% (from 65 to 110 transactions). However, due to the smaller number of transactions, the impact on the overall number of housing transactions was less evident.

A total of 952 new apartments and terraced houses were under agreement in the capital in the last quarter, compared to 668 in the previous quarter and 669 a year ago. It is the best quarter’s results in Vilnius since the beginning of 2022 – 2,436 transactions have already been concluded this year, with an average of almost 271 dwellings per month. In comparison, demand for 2023 was 2,698 dwellings (sales rate of 225 dwellings/month), and for 2022 it was 2,645 dwellings (an average of 220 dwellings/month). In September, 341 transactions were recorded, almost as many as in August – the most active month of the year. Last month’s result was nearly two-thirds higher than in September last year.

Tarutis: ‘Better conditions for buyers, in addition to more accessible financing, were also created by the growing housing inventory. Since the beginning of the year, the housing stock size has increased by almost a quarter – from 4,322 to 5,351 units. Over a year, this number grew by 35% (from 3,968 units). However, about 1,000 units in this figure consist of what we call “illiquid supply” – dwellings that have remained unsold for two years or more. Developers have been expanding the inventory since the beginning of the year, with a peak in May when the stock grew by 745 apartments and terraced houses in a month. Since then, growth has been more moderate, but the current inventory is optimal and will help manage price increases in the face of growing demand, at least until the start of next year’.

The supply was replenished in September with 232 apartments in three new projects and two new phases of previously launched projects.

The average supply prices of apartments remained almost unchanged during the month – they increased by 0.68% to EUR 3,385/sqm. According to the preliminary data of Citus analysts there was also an increase of 1.29% during the quarter, 2.58% since the beginning of this year and 3.93% during the last twelve months.

The company CITUS concluded 27 deals in September, 63 in the quarter and 198 in the first nine months of the year. Last year, 168 deals were completed in the same period and 53 in the quarter a year ago. The company’s supply currently consists of 188 units in Vilnius (including the recently launched second phase of the project Kaip Niujorke by CITUS, but excluding the new project Senamiesčio Link by CITUS, which has been launched this week), four lofts and mixed-use premises in the project Radio City by CITUS in Kaunas, 69 apartments in Druskininkai in the project Nemunas by CITUS, and 11 apartments in the project Nidos Bangos by CITUS.

In September, 67 transactions were recorded in the primary housing market of Kaunas, 192 in the quarter and 596 this year. The previous quarter in Kaunas was slightly less productive, with 167 apartments and terraced houses agreed and 156 in July–September 2023. This year’s result is better than last year: 495 deals were concluded in the previous year, although, 809 were concluded in 2022.

The supply of new dwellings in Kaunas increased by 8.05% during the month (from 1,031 to 1,114); it was also 16.7% higher than at the beginning of the year (955) but 3.6% lower than in September last year (1,156). The number of new dwellings in the inventory was also significant in September, with three new projects and one new phase of an earlier project presented in the city, totalling 140 dwellings.

Housing prices in Kaunas grew the most rapidly of the three cities. Still, this growth did not reach the double-digit threshold: average supply prices of apartments increased by 3.48% per month, from EUR 2,702 to 2,796/sqm, by 5.15% per quarter, by 7.50% since the beginning of the year (from EUR 2,601/sqm), and by 8.12% over the last 12 months (from EUR 2,586/sqm).

Analysts at Citus indicate that housing prices in Kaunas are often significantly influenced by new supply. In the last period, a premium class project with a high average price appeared in the inventory, raising the average price of the market supply. However, in any case, housing prices in Kaunas are increasing.

In Klaipėda, increased activity has also been observed recently, though it is not as pronounced or consistent as in Vilnius. In September, 39 new dwellings were sold in the port city, 110 for the quarter and 196 for the year to date. Last quarter was the best this year and better than the same period in 2023 (91), but the total for the whole year is slightly below last year (230).

Supply in the city of Klaipėda has recently stopped growing, and the former rapid growth has been restrained: the range of new housing units fell by 6.7% in one month (from 550 to 513 units), by 5.7% since the beginning of the year (from 544) and by 6.0% since September last year (from 484). However, no new projects or phases have been recorded in the port city for three months.

Average supply prices in Klaipėda increased, but only slightly – similar to Vilnius. In one month, prices increased from EUR 2,265 to 2,269/sqm (0.18%), in a quarter – by 3.56% (from EUR 2,191/sqm), since the beginning of the year, by 2.25% (from EUR 2,219/sqm), and in the last 12 months by 4.18% (from EUR 2,178/sqm). Citus analysts, when assessing demand in the primary housing market, calculate preliminary transactions for purchased apartments and terraced houses. Terraced houses are included in this figure because, technically, most terraced houses are classified as apartments and are of interest to home buyers. Furthermore, the current month’s result does not exclude cancellations of market-preliminary contracts, which are usually related to previously concluded transactions and, therefore, do not reflect the current month’s demand. Sometimes, sales figures increase due to the processing of sales from previous months, which may cause a spike in a particular month’s data. However, these discrepancies are recorded, and the data is continuously updated, so any inconsistencies tend to even out over an extended period.