Lithuania

After almost three years of house price falls, the housing market in Lithuania is finally recovering.

The apartment price index for five largest cities rose slightly by 0.1% in October 2011 on the same month last year, according to Ober Haus. However, when adjusted for inflation, house prices are still down by 4.4% over the same period.

In Vilnius, the capital city, property prices rose by 3% to €1,208 per sq. m., according to the preliminary figures from Lithuania’s registry office. On a quarterly basis, property prices fell by 0.8% in Q3 2011, after a 2.2% drop in the previous quarter.  House prices in Vilnius are still down  by 39.1% from the peak in December 2007.

On the other hand, property prices in all other cities (excluding Vilnius) rose by 6% y-o-y to Q3 2011. House prices dropped 2.9% q-o-q to Q3 2011.

After registering double-digit house price increases from 2003 to 2007, house prices started to decline in 2008 due to the global crisis.

In 2008, house prices dropped by 15.2% (-21.8% inflation-adjusted)In 2009, house prices plunged by 26.8% (-27.7% inflation-adjusted)In 2010, house prices fell by 3% (-6.4% inflation-adjusted)

The average interest rate paid by households for a housing loan denominated in Lithuania litas (LTL) currently stands at 3.6%, down from 6.2% in March 2010. In mid-2011, the average interest rate on new mortgage loans was about 3.4%.

Lithuania’s property market is expected to continue recovering, fuelled by strong economic growth (with projected GDP growth rate of 6.2% in 2011).

» To continue reading this article, subscribe now!