Despite an anticipated economic slowdown this year due to the Russia-Ukraine war, Lithuania’s housing market is still booming.
According to Ober Haus Real Estate Advisors, the apartment price index for the five major cities—Vilnius, Kaunas, Klaipda, Iauliai, and Panevys—rose by 21.15% in the year leading up to Q1 2022. However, over the same period, actual real-world apartment price growth was only 4.7%.
The enormous discrepancy between the nominal and real figures is the result of rising inflation. The national inflation rate increased to 18.9% in May 2022, the highest level since September 1996, primarily due to a sharp rise in the price of commodities globally.
Apartment prices hiked nationwide quarterly by 3.24%, but after inflation, they fell by 3.02%.
Nominal house prices in Q1 2022
Demand is rapidly increasing. According to data from the State Enterprise Centre of Registers, there were 39,849 residential property transactions in Lithuania in 2021, up 21% from a year earlier and by 11% from two years prior. Last year, home sales increased by double digits in almost all major cities.
Mixed construction activity is occurring in homes. According to data from Statistics Lithuania, dwelling permits increased by 30% year over year in 2021 to reach 19,480 units, while completions decreased by 21.1% year over year to 10,951 units.
Before Q1 2022, nominal house prices increased significantly in all major cities in Lithuania
Vilnius
Vilnius’s average apartment cost €2,158 per square meter in Q1 2022, up 22.2% year over year (sq. m.). Prices in the capital city rose 5.59% over the same period after accounting for inflation.
Kaunas
Apartment costs in Kaunas grew significantly by 23.1%, to an average of €1,506 per square meter (up 6.37% after inflation).
Klaipda
Apartment costs in Klaipda hiked by 18.05% to an average of €1,429 per square meter (up 2% after inflation).
Laullai
Apartment prices in Iauliai grew by 16.6% to an average of €969 per sq. m. (inflation-adjusted prices increased by a negligible 0.8%).
Panevys
In Panevys, the average price of an existing apartment increased by 15.3% to €938 per square meter (after inflation, it decreased slightly by 0.34%).
That crazy housing boom and bust
Lithuanian home prices soared before the financial crisis. The cost of an old apartment in Central Vilnius rose 275 percent between 2002 and 2006. In 2003, 2004, and 2005, housing prices rose 28%, 49%, and 56%, respectively.
After the worldwide credit crunch, city home prices fell in 2008. In 2008, housing prices declined 15.2% (-21.9%), and 26.8% in 2009. (adjusted for inflation: -27.8 percent). From 2010 through 2012, annual price decreases averaged 1.8%. (Or 4.9 percent when adjusted for inflation).
Vilnius two-bedroom apartments rent for €320-€400 per month, up from €270-€330 in 2020. A similar-sized new apartment now rents for €400 to €530 a month, up from €350 to €470 a year ago.
A furnished two-bedroom apartment in the city costs €400 to €750 a month, up from €320 to €660 in 2020. Three-bedroom apartment rates have risen from €420 to €950 to €530 to €1,100. Large, well-appointed apartments in the Old Town rent for €1,300 to €1,500, up from €1,000 to €1,400 in 2020.
