House prices up 4.58% during the year to Q2 2020

Lithuania’s housing market remains healthy, with the five major cities’ apartment price index (covering Vilnius, Kaunas, Klaipėda, Šiauliai and Panevėžys) rising by 4.58% y-o-y in Q2 2020 (inflation-adjusted) – an improvement from a y-o-y rise of 3.04% in the same period last year. Quarter-on-quarter, house prices increased slightly by 0.19% in Q2 2020.

Demand and supply weakening

In 2019, the overall number of transactions for houses and apartments in Lithuania rose by 9% from a year earlier, according to the Ober Haus. In Vilnius, apartment sales increased 8% while house sales rose by almost 15% last year. In terms of value, residential transactions in Vilnius reached €1.1 billion in 2019, up 15% from a year earlier.

In the first two months of 2020, before the imposition of quarantine and travel restrictions, transactions for apartments and houses rose by 12% and 23% y-o-y, respectively. However in March 2020, sales for apartments plunged 26% and by 27% for houses, based on figures from Ober Haus.

Yet residential construction activity is mixed. In the first half of 2020, dwelling permits rose by 14% y-o-y to 7,596 units while dwelling completions fell by 3.1% to 6,266 units, according to Statistics Lithuania. 

Rents, rental yields: rental yields are good at 5.39%Vilnius apartment costs are very low at around €2,163 per sq. m. 

Lithuania: typical city centre apartment buying price, monthly rent (120 sq. m)
  Buying price Rate per month Yield
Vilnius € 259,560 € 1,166 5.39%

Recent news. Lithuania’s economy contracted by 3.8% in Q2 2020 from a year earlier, in contrast to expansions of 2.4% in Q1 2020 and 3.8% in Q2 to Q4 2019, according to Statistics Lithuania. In a quarterly basis, the economy actually shrank by 5.1% in Q2 2020, following a 0.3% drop in Q1 – officially putting the country under technical recession. The European Commission recently projects that the Lithuanian economy will contract sharply by 7.1% this year, following a growth of 3.9% last year, mainly due to the fallout from the coronavirus outbreak.