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Last Updated: Apr 20, 2017




House prices continue to rise in Lithuania, amidst modest economic growth. Property demand is rising strongly, and residential construction is surging. Apartment prices in the capital, Vilnius, have risen by 24.4% (11.2% inflation-adjusted) since the post-crisis low of May 2010, in a slow and steady rise.

Lithuania’s five major cities’ apartment price index (covering Vilnius, Kaunas, Klaipėda, Šiauliai and Panevėžys) rose by 5.56% during the year to Q1 2017(2.38% inflation-adjusted), according to OberHaus Real Estate Advisors.

All of Lithuania’s major cities saw moderate house price rises during the year to end-Q1 2017:
  • In Vilnius average apartment prices rose by 6.8% y-o-y in Q1 2017, to €1,435 per square metre (sq. m.).
  • In Kaunas, apartment prices rose by 4.5%, to €993 per sq. m.
  • In Klaipėda, apartment prices increased 2.9%, to an average of €1,019 per sq. m
  • In Šiauliai, apartment prices increased 5.2%, to an average of €601 per sq. m.
  • In Panevėžys, existing flats rose by 4.7%, to an average of €562 per sq. m.

Property demand is now rising strongly. Apartments purchase-sale transactions in the country rose by 13% y-o-y in 2016, based on figures from State Enterprise Centre of Registers. For private homes, purchase-sale transactions increased 7% over the same period.


In major Lithuanian cities:

  • In Vilnius, apartment purchase-sale transactions rose by 13% y-o-y in 2016 while house sales fell by 9%. Land transactions in the city increased 16% over the same period.
  • In Kaunas, transactions for apartments and houses increased by both 10% y-o-y in 2016.
  • In Klaipėda, apartment transactions rose by 10% while house sales fell by 5%.
  • In Šiauliai, apartment sales rose by 9% and house sales soared 28% over the same period.
  • In Panevėžys, apartment sales increased slightly by 1% while house sales surged by 34%.

Due to the strong demand, there are fewer unsold newbuild apartments in the market. In 2016, there were about 1,020 unsold newly built apartments in Vilnius, almost 30% down from the previous year.

Residential construction is surging. New dwellingbuilding permitgrants rose by 22.3% y-o-y in 2016, while completions surged by 24.8%, according to Statistics Lithuania.

“The main reasons for market activity and price growth [are] growing income of the population, particularly low loan interest rates and continuing interest in housing as an investment,” said OberHaus on its recent report.

Almost all Lithuanian dwelling stock (98%) is in private ownership.

lithuania house pricesThere are virtually no restrictions in foreign ownership of land in Lithuania, except for agricultural lands.

Lithuania’s economy grew by 2.2% in 2016, after expanding by 1.8% in 2015, 3% in 2014, 3.3% in 2013, 3.8% in 2012, and 6.1% in 2011. The economy is expected to expand by a modest 2.9% this year and by another 2.8% in 2018, according to the European Commission. Lithuania finally joined the eurozone in January 1, 2015.

Analysis of Lithuania Residential Property Market »


RENTAL YIELDS
Last Updated: Aug 02, 2014



In Vilnius, rental yields are about the same this year as two years ago, or maybe just a little lower. Gross rental yields on apartments both in the city centre and in the suburbs are around 5%. These are moderately good yields. We haven't been able to bring you yields estimates for the very smallest apartments, but would guess that yields would be somewhat higher.

After collapsing during 2008-2010, prices in Vilnius have seen a U-Curve: in the past year there has been a rise of around 5%. Prices of old, but fully refurbished apartments located in Vilnius’ city centre and old town range from EUR 2,050 to EUR 2,400 per square metre (sq. m.).

This means that a 120 sq. m. in the city centre costs on average EUR 280,000, whereas in the suburbs, it costs on average EUR 220,000. Suburban prices have been increasing, especially for larger, more luxurious houses.

Rental rates are somewhat lower in the suburbs. Rents in the centre are around EUR 9-10 per sq. m. per month, while in the suburbs rents are around EUR 7-8 per sq. m. per month.

A 120 sq. m. apartment in the centre could be rented out for around EUR 1,100 per month while in the suburbs, a 120 sq. m. apartment fetches around EUR 850 per month.

Round trip transaction costs are very low in Lithuania.  See our Property transaction costs analysis for Lithuania and Property transaction costs in Lithuania, compared to the rest of Europe.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Jul 24, 2017



Rental Income: Rental income tax is moderate at 15% of the gross income.

Capital Gains: Capital gains are treated as ordinary taxable income.

Inheritance: The inheritance of the spouse and children are exempt from inheritance tax.

Residents: Residents are taxed on their worldwide income. Residents are entitled to a basic non-taxable allowance as well as other deductions.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Jul 25, 2017



Roundtrip transaction costs, i.e., the cost of buying and selling property, are generally low at 2.295% to 4.61%. However, buildings sold within 24 months of completion are subject to 21% VAT. The seller typically pays the real estate agent’s fee, which ranges from 1.5% to 3%, plus 21% VAT.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: Jul 05, 2006



Rent: Rents can be freely negotiated between landlord and tenant. If the tenant cannot agree the renewal terms with the landlord, he may go to court for arbitration of the amount of rent.

Tenant Security: Upon expiration of a contract the tenant has the ‘priority right’ to renew for a new term, which will be for twelve months.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Apr 20, 2017


Modest economic growth; sustainable public finances

Lithuania gdpLithuania is the most populous and largest of the Baltic States, with a population of around 2.9 million in 2016. Following independence from the USSR in 1990, Lithuania emerged as a successful transition state, becoming one of Europe’s fastest growing economies. Lithuania joined NATO and the EU in 2004.

After average growth of 8.2% from 2001 to 2007 the economy began to slow in 2008, due to contagion from the global financial meltdown. In 2009, the Lithuanian economy shrank by almost 15%, the worst recession in the EU, largely due to the bursting of the property bubble, higher tax rates, the end of cheap money and a huge contraction in exports.

In 2010 the economy finally emerged from recession, with GDP growth of 1.6%.

Then in 2011 the Lithuanian economy began to expand strongly, with real GDP growth of 6.1%, the second fastest pace in the EU. In 2014, Lithuania’s economy expanded by a modest 2.9%, after expanding by 3.3% in 2013, and 3.8% in 2012, according to Statistics Lithuania. Lithuania’s growth over the past five years has been impressive. However in 2015, economic growth slowed to 1.6%, the slowest growth since 2009, due to sluggish investment and decline in exports to Russia, the country's largest single trading partner.

Then in 2016, the economy expanded by 2.2%, amidst strong household consumption. The economy is expected to expand by a modest 2.9% this year and by another 2.8% in 2018, according to the European Commission.

Nationwide unemployment increased slightly to 8.3% in February 2017, from 8% in the same period last year, according to Eurostat.

Inflation accelerated to 3.2% in February 2017, up from just 0.7% in 2016 and a deflation of 0.7% in 2015, according to Eurostat.

Inflation is expected at 2.1% this year and 1.9% next year, according to the European Commission.

Lithuania’s budget deficit stood at 0.5% of GDP in 2016, from 0.2% in 2015, 0.7% in 2014 and 2.6% in 2013 and far below the 3% limit under the EU’s stability and growth pact.

During the global crisis, the deficit had ballooned to 9.4% of GDP in 2009, and remained high in 2010 at 7.2% of GDP, and 8.9% in 2011. Then in 2012, Lithuania adopted a budget that would narrow the public sector deficit to 3.1% of GDP, in a bid to join the eurozone.

The country’s deficit is projected to increase slightly to 0.7% of GDP this year, according to the European Commission.

Government debt was equivalent to 40.8% of GDP in 2016, from 42.7% of GDP in 2015 and 40.7% of GDP in 2014, and still well below the 60% threshold.

Gross public debt is expected to increase to 43.5% of GDP this year before falling to 39.6% of GDP in 2017.

Lithuania joined the Euro on January 1, 2015, the bloc’s 19th member. Lithuania was refused euro entry once before, in 2006, after it failed to meet the inflation criteria. The Litas, which had been pegged to the Euro for a decade, went out of circulation.







  • Very low transaction costs
  • Low effective rental income tax rates
  • Generally low yields in Vilnius
  • Slighlty pro-tenant market
RESIDENTIAL PROPERTY FACTS
Price (sq.m): €2,370 For a 120 sq. m. property, usually an apartment.
Rental Yield: 4.69% For a 120 sq. m. property, usually an apartment.
Rent/month: €1,111 For a 120 sq. m. property.
Income Tax: 1.96% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 3.44% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 15.00% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Tenant Rating is based on a detailed study of each country’s law and practice.

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