On 1 January 2015, Lithuania said goodbye to litas and switched to euros. Neighboring Latvia recently raised prices for residence permit and tried to deny the Russians the right to receive it. Maybe here it is – the precious chance to Lithuania? Is the country ready to loudly declare themselves and to fight for Russian buyers of European real estate?
Price curve turned into a straight line
Now real estate prices in Lithuania do not change at all. They froze after drop, and remained unchanged for the past five years. Then, during the crisis, housing got cheaper by almost 40%, but there is still no recovery. According to analysts of the largest in the Baltic real estate agency Ober-Haus, in November 2014 apartments in big cities of Lithuania cost only 3.6% more than in November 2013 — it is just a slight change at this stage of low base.
If we turn percent into prices, according to Ober-Haus Lithuanian Apartment Price Index, the picture is as follows. In November apartments in Vilnius cost €1,281 per square meter, so a two-room option cost about €75,000-80,000. It is more expensive than in Riga, but cheaper than in Tallinn. Other major cities of Lithuania are more noticeably ahead.
|
City
|
Population
|
Access to the sea
|
Cost per sq.m.
|
Changes for the year
|
|
Vilnius
|
528,000
|
no
|
€1282
|
+5,5%
|
|
Kaunas
|
307,000
|
no
|
€940
|
+2,6%
|
|
Klaipeda
|
159,000
|
yes
|
€975
|
+1,6%
|
|
Siauliai
|
107,000
|
no
|
€558
|
+1,3%
|
|
Panevezys
|
98,000
|
no
|
€530
|
+0,9%
|
In Vilnius, there are the same market laws, as in any other city of the world: real estate in the Old City is more expensive (up to €3,200 per sq.m., in the surrounding popular areas (Antakalnis, Zverinas, Naujamiestis, Valakampių) it is cheaper (up to €2,100 per square meter), and in the suburbs you can find an apartment for less than €700 per sq.m.
It is noteworthy that at the beginning of 2014 one could notice unprecedented activity in the housing market in Lithuania in anticipation of adopting the euro. Thus, the number of deals with houses in Lithuania increased by 27% in Q1 2014 in annual terms, and transactions with apartments increased by as much as 48%. In total about 3,400 transactions per month, which is similar to the pre-crisis indicators 2004-2007.
Vilnius
Euro is only approaching and the prices are growing already
Lithuania is the last among the Baltic States to adopt the euro. It looks like it is ready to take the leap to the arms of the West, and not political, as ten years ago, but economic.
63% respondents of Eurobarometer were for accession to the monetary union, while 31% treated the upcoming change negatively. It would seem that change to the new currency should not cause rejection of the population, as litas exchange rate is tied to the euro at a specific ratio and does not change every day, depending on market fluctuations. But no, many Lithuanians have noticed that on the eve of innovations prices in stores grew without any economic reasons.
Experts say it is nothing about real estate in Lithuania, and no special changes are expected after replacing the banknotes with outstanding compatriots to the ones with the masterpieces of European architecture.
Druskininkai
The real estate market will not notice adoption of the euro
Real estate experts in countries that adopt the euro (Estonia, Latvia, and Lithuania), always give reasons to the lack of impact of the new currency on the market with the phrase: "All prices have been in euro for a long time anyway." Or such phrase: "We have affordable mortgages, and in euro, it will not be cheaper."
In addition, the ratio of the local currency and the euro is clearly recorded and has not changed for many years. Lithuanian litas, for example, cost exactly 3,453 times cheaper than euro. But human factor has not been canceled, and possibly, some sellers will want to raise price of their property, as well as owners of grocery stores. But even if this were to happen, in the medium term, everything will return to normal.
Palanga
Head of Research and Evaluation of Ober-Haus Lithuanian Saulius Vagonis said: "The most probable variant of market behavior in 2015 is a temporary lull in demand in the first half of the year, and then a gradual slight increase. Mortgage loans in Lithuania are already quite affordable and cheap. To disperse there is no need in funding (it is, in my opinion, quite sufficient), but increase of purchasing ability of the population. That is, property prices can only grow together with wages and better expectations of the population. But it will not turn up immediately after introduction of the euro so that large changes in the housing market in Lithuania in 2015 are not expected. "
Text: Alexander Fetyukov, ee24.com
Litas and euro
Read also:
Lithuanian Kėdainiai: tax free made in EU
New Silicon Valley in Vilnius park
The Lithuanian high scores. The number of transactions increased dramatically in 2014
Euro instead of Litas: how will it affect Lithuanian real estate market?