02.09.2016, 16:30
Bank of Lithuania Survey: Acceleration in RE Price Growth Not Expected
OREANDA-NEWS. Apartment prices in downtown Vilnius are approximately 1.5 times higher than in the residential areas of the capital city or in Kaunas and Klaipėda. Office rental rates in downtown Vilnius were 1.5 times higher than in the residential areas of the capital city or downtown Kaunas and Klaipėda, and more than 2 times higher than in the residential areas of Kaunas and Klaipėda. Such differences in apartment prices and office rental rates in three major Lithuanian cities were revealed in the Survey of the Real Estate (RE) Market Participants, conducted by the Bank of Lithuania this summer. Such surveys are conducted on a quarterly basis, and their reviews are published bi-annually.
‘The latest Survey results show that the RE market should see healthy developments. In assessing future prospects, the majority of RE market participants expect apartment prices in downtown Vilnius and Klaipėda to rise up to 5 per cent within the next 12 months. Diverging opinions were expressed in relation to supply and demand developments in Vilnius: the majority of the RE market experts indicated that housing supply in the capital should increase; however, at the same time, almost every fourth expert believed that housing demand in Vilnius within the next year would decrease’, said Andrius Škarnulis, Head of the Macroprudential Analysis Division at the Bank of Lithuania.
Recently, activity and prices in the residential property market, according to A. Škarnulis, have followed a moderate upward trend, yet the market shows no signs of overheating — for example, housing supply in the market is sufficient and does not create any imbalances. The RE market and its sustainable development are crucial to maintaining the stability of the domestic financial system, hence the Bank of Lithuania regularly and closely monitors the situation in the RE market, assesses its latests trends and, having identified signs of imbalanced growth, implements stabilising macro-prudential policy measures.
During the Survey, the RE market participants indicated that, in the second quarter of this year, the average price per square meter of apartments in the residential areas of Vilnius totalled EUR 1,500, in downtown Vilnius — EUR 2,300. In terms of the residential areas of Kaunas and Klaipėda, the per-square-meter price amounted to EUR 1,200 and 1,100 respectively in the second quarter of 2016. According to the RE market experts that participated in the Survey, the average monthly rental rate for a standard 55-square-meter apartment in the residential areas of Vilnius currently stands at approximately EUR 385, in Kaunas — EUR 330, in Klaipėda — EUR 303 .
Based on the opinion of the RE market participants, housing prices in the major cities should rise moderately within the next year. Regarding downtown Vilnius and Klaipėda, 76.2 and 66.7 per cent of respondents respectively predicted an annual rise in housing prices reaching up to 5 per cent. There were much less of those believing that prices would increase by 5–10 per cent — 5 per cent of respondents expected such an increase in the residential areas of Vilnius, 11 per cent — in downtown Kaunas, and 8 per cent — in residential areas of Klaipėda.
In the assessment of the surveyed, the monthly office rental rate in downtown Vilnius and the residential areas of Vilnius, on average, totalled EUR 15 and 10 per square meter. Office rental rates were quite similar in Kaunas and Klaipėda — in the downtown area they amounted to EUR 10 per square meter, whereas in the residential areas — EUR 7 and 6 respectively. Most respondents (more than 50% of the surveyed) are of the opinion that within the next 12 months office rental rates in all three major cities will remain unchanged.
According to the respondents, within the year RE developers will offer more office rentals in all major cities — somewhat different trends are recorded in Vilnius, where almost all surveyed expect an increase in office supply within the next 12 months.
The Survey involved representatives of the RE development and management companies, RE appraisers, agents, representatives from credit institutions, etc. It was carried out in July 2016.
‘The latest Survey results show that the RE market should see healthy developments. In assessing future prospects, the majority of RE market participants expect apartment prices in downtown Vilnius and Klaipėda to rise up to 5 per cent within the next 12 months. Diverging opinions were expressed in relation to supply and demand developments in Vilnius: the majority of the RE market experts indicated that housing supply in the capital should increase; however, at the same time, almost every fourth expert believed that housing demand in Vilnius within the next year would decrease’, said Andrius Škarnulis, Head of the Macroprudential Analysis Division at the Bank of Lithuania.
Recently, activity and prices in the residential property market, according to A. Škarnulis, have followed a moderate upward trend, yet the market shows no signs of overheating — for example, housing supply in the market is sufficient and does not create any imbalances. The RE market and its sustainable development are crucial to maintaining the stability of the domestic financial system, hence the Bank of Lithuania regularly and closely monitors the situation in the RE market, assesses its latests trends and, having identified signs of imbalanced growth, implements stabilising macro-prudential policy measures.
During the Survey, the RE market participants indicated that, in the second quarter of this year, the average price per square meter of apartments in the residential areas of Vilnius totalled EUR 1,500, in downtown Vilnius — EUR 2,300. In terms of the residential areas of Kaunas and Klaipėda, the per-square-meter price amounted to EUR 1,200 and 1,100 respectively in the second quarter of 2016. According to the RE market experts that participated in the Survey, the average monthly rental rate for a standard 55-square-meter apartment in the residential areas of Vilnius currently stands at approximately EUR 385, in Kaunas — EUR 330, in Klaipėda — EUR 303 .
Based on the opinion of the RE market participants, housing prices in the major cities should rise moderately within the next year. Regarding downtown Vilnius and Klaipėda, 76.2 and 66.7 per cent of respondents respectively predicted an annual rise in housing prices reaching up to 5 per cent. There were much less of those believing that prices would increase by 5–10 per cent — 5 per cent of respondents expected such an increase in the residential areas of Vilnius, 11 per cent — in downtown Kaunas, and 8 per cent — in residential areas of Klaipėda.
In the assessment of the surveyed, the monthly office rental rate in downtown Vilnius and the residential areas of Vilnius, on average, totalled EUR 15 and 10 per square meter. Office rental rates were quite similar in Kaunas and Klaipėda — in the downtown area they amounted to EUR 10 per square meter, whereas in the residential areas — EUR 7 and 6 respectively. Most respondents (more than 50% of the surveyed) are of the opinion that within the next 12 months office rental rates in all three major cities will remain unchanged.
According to the respondents, within the year RE developers will offer more office rentals in all major cities — somewhat different trends are recorded in Vilnius, where almost all surveyed expect an increase in office supply within the next 12 months.
The Survey involved representatives of the RE development and management companies, RE appraisers, agents, representatives from credit institutions, etc. It was carried out in July 2016.
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