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Last Updated: Jun 24, 2016

Lithaunia’s housing market shows mixed results, amidst economic slowdown. House prices continue to rise, but only modestly. While property demand remains depressed, residential construction activity has bounced back strongly.

Lithuania’s five major cities’ apartment price index (covering Vilnius, Kaunas, Klaipėda, Šiauliai and Panevėžys) rose by 3.39% (2.35% inflation-adjusted) y-o-y in April 2016, according to Ober Haus Real Estate Advisors.

Apartment prices in the capital, Vilnius, have risen by 17.1% since the post-crisis low of May 2010, a slow and steady rise.

During the year to April 2016:
  • In Vilnius average apartment prices rose 4.6%, to €1,352 per square metre (sq. m.).
  • In Kaunas, apartment prices rose by 1.8%, to €957 per sq. m.
  • In Klaipėda, apartment prices increased 1.7%, to an average of €992 per sq. m
  • In Šiauliai, apartment prices increased 2.5%, to an average of €573 per sq. m.
  • In Panevėžys, existing flats rose by 1.8%, to an average of €539 per sq. m.

Residential property prices in the capital started to decline in 2008, after the global credit crunch. The housing market has started to recover in 2013.
  • In 2008, house prices fell by 15.23% (-21.85% inflation-adjusted)
  • In 2009, house prices fell by 26.84% (-27.77% inflation-adjusted)
  • In 2010, house prices fell by 2.98% (-6.55% inflation-adjusted)
  • In 2011, house prices dropped by 0.64% (-3.91% inflation-adjusted)
  • In 2012, house prices dropped by 1.65% (-4.36% inflation-adjusted)
  • In 2013, house prices rose by 1.12 (0.76% inflation-adjusted)
  • In 2014, house prices rose by 3.34% (3.61% inflation-adjusted)
  • In 2015, house prices rose modestly by 2.29% (2.38% inflation-adjusted)

Demand remains very weak. Transactions for apartments dropped 9.8% in 2015 from a year earlier while land purchase transactions fell by 1.8%.

On the other hand, the number of dwellings for which building permits were granted rose by 18.6% y-o-y in 2015 while dwellings completions surged by 33.5%, based on figures from Statistics Lithuania.

Private ownership accounted for around 98% of the total area of dwelling stock in 2015.

Except for agricultural lands, there are virtually no restrictions in foreign ownership of land in Lithuania.

lithuania house pricesLithuania’s economic growth slowed to 1.6% in 2015, after expanding by 3% in 2014, 3.3% in 2013, 3.8% in 2012, 6.1% in 2011, and 1.6% in 2010. In the first quarter of 2016, Lithuania’s economy grew by 2.4% compared to the same period last year, thanks to strong domestic consumption, according to Statistics Lithuania. The economy is expected to expand by a modest 2.7% this year and by another 3.1% in 2017, according the International Monetary Fund (IMF). Lithuania finally joined the eurozone in January 1, 2015.

Analysis of Lithuania Residential Property Market »

Last Updated: Aug 02, 2014

In Vilnius, rental yields continue to climb. Gross rental yields on apartments in the city centre range from 5.79% to 6.01%. In the suburbs, rental yields range from 4.64% to 6.00%. These are moderate to good yields, and suggest that the economy continues to pick up.

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 1,750 to EUR 2,000 per square metre (sq. m.). In the prestigious suburban neighborhoods of Vilnus (Antakalnis, Zverynas and Valakampiai), old refurbished apartments cost around EUR 1,500 to EUR 2,100 per sq. m.

This means that a 120 sq. m. in the city centre costs on average EUR 240,000, whereas in the suburbs, it costs on average EUR 255,000. 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 8 per sq. m. per month.

A 120 sq. m. apartment in the centre could be rented out for around EUR 1,200 per month while in the suburbs, a 120 sq. m. apartment fetches around EUR 900 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  »

Last Updated: Mar 22, 2016

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  »

Last Updated: Mar 17, 2015

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  »

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  »

Last Updated: Jun 24, 2016

Modest economic growth, declining unemployment

Lithuania gdpLithuania is the most populous and largest of the Baltic States, with a population of around 2.9 million in 2015. 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, 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 2013, Lithuania’s economy grew by a healthy 3.3%, after expanding by 3.8% in 2012, according to Statistics Lithuania. In 2014, the economy grew modestly by 2.9%, fuelled by strong domestic demand and a recovery in the real estate and construction sectors.

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.

In the first quarter of 2016, Lithuania’s economy grew by 2.4% compared to the same period last year, thanks to strong domestic consumption, according to Statistics Lithuania.

"In the first quarter of 2016, the positive change in GDP was mainly conditioned by whole trade and retail trade, repair of motor vehicles and motorcycles, transportation and storage, and manufacturing activities," said Statistics Lithuania.

Lithuania unemploymentThe economy is expected to expand by a modest 2.7% this year and by another 3.1% in 2017, according to the IMF.

Unemployment continues to fall. In March 2016, the jobless rate stood at 8.5%, down from 8.8% in the previous month and 9% in the same period last year - and down from 17.8% in 2010, according to Statistics Lithuania.

From 2009 to 2014, the country’s unemployment rate averaged 13.8%, sharply up from an average of 6% in 2004-08, according to the IMF.

The country recorded a deflation rate of 0.7% in 2015, the first year of declining consumer prices since 2003, according to Statistics Lithuania. From 2009 to 2014, nationwide inflation rate averaged 2.3%, according to the IMF.

Inflation is expected at 0.5% this year, before accelerating to 1.8% next year, due to falling energy prices, according to Bank of Lithuania.

Lithuania’s budget deficit was just 0.2% of GDP in 2015, down from 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.

Government debt increased to 42.7% of GDP in 2015 from 40.7% of GDP in 2014, but still well below the 60% threshold.

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.

After one year of using the Euro, economists assess that it is helping the country weather external shocks. “The euro helped build business confidence and consumer confidence,” said Zygimantas Mauricas of Nordea Bank.

"People thought that the euro would make things more expensive, instead, people ended up making more money. Now you have stability and the common currency just makes it easier to do business and to invest,” added Mauricas.

  • Very low transaction costs
  • Low effective rental income tax rates
  • Generally low yields in Vilnius
  • Slighlty pro-tenant market
Price (sq.m): €1,998 For a 120 sq. m. property, usually an apartment.
Rental Yield: 5.98% For a 120 sq. m. property, usually an apartment.
Rent/month: €1,195 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: 3.34% 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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