Housing ‘more affordable’ in Vilnius despite skyrocketing prices

DELFI / Karolina Pansevič

With housing prices having been on the rise for the past five years, demand has kept pace.

According to Head of Valuation & Analysis for Ober-Haus Saulius Vagonis and chief economist for Swedbank Nerijus Mačiulis, this has occurred due to rising wages and particularly low interest rates on housing loans.

Vagonis highlights that while housing prices have risen by more than 20% in Vilnius, it is an exceptional case with other towns and cities only seeing rises of 4-5%. Nevertheless, wages have risen far more rapidly, thus actually increasing home affordability, a figure which is in fact twice what it was at the peak of the pre-crisis housing bubble in 2008.

Low interest rates on housing loans also significantly contribute to housing affordability. This is clearly visible with 2006-2007 interest rates having been at 6.5 to 7%, while now they stand at 2 to 2.5%.

With this in mind, neither a new real estate bubble is expected, nor a decrease in housing prices, the experts say. With a vast supply of unsold flats and other properties in Vilnius as improved credit regulation, price jumps are not expected, according to Mačiulis.

The pricing of real estate in the Lithuanian capital is particularly varied with surprising prices for small flats from €6,000 to 12,000 being possible to find even if in very poor conditions.

On the other end of the scale, such small flats can reach prices of up to €166,000, albeit in far superior condition. A three-room flat can cost from a low of €30,000 euro in the Kirtimai area of Vilnius to €600,000 in luxurious building complexes with furnishing included.

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