Tadas Povilauskas. Housing is rapidly getting more expensive, but residents' expectations for further changes are almost unchanged

A significant majority of Lithuanians anticipate a continued rise in housing prices, according to a June survey commissioned by SEB bank and conducted by "Baltijos tyrimai." The poll found that 65% of respondents believe housing costs will increase over the next twelve months, while only 6% expect them to fall. Another 21% foresee no major changes.

The housing market remains active, with the number of transactions in the second quarter of this year increasing by 6% compared to the same period last year. This marks the second-highest transaction volume for a second quarter in the past decade. However, data for the first half of the year suggests that the peak transaction numbers seen in 2021 are unlikely to be surpassed. The article notes that a surge in registered new construction deals in Vilnius, a consequence of a jump in the primary market last year, has positively influenced transaction growth.

Despite the market's activity, affordability is becoming a growing concern. Housing prices have been appreciating much faster than income growth in recent quarters. This trend, coupled with a relatively stable number of transactions in the primary market and a slight decrease in non-new construction deals in Vilnius during the second quarter, indicates that the market may have reached its peak activity. The article suggests limited room for further growth in transaction numbers in the second half of the year.

Expectations regarding housing price changes remain high, particularly in Vilnius, where 67% of respondents anticipate an increase. However, this figure has seen a slight decrease from the previous quarter. Similar, though smaller, reductions in expectations were observed in the Kaunas and Klaipėda regions. These shifts, while minor, could signal that the peak of market expectations has passed. The influence of funds withdrawn from second-pillar pension funds, which was a significant factor in last year's demand, appears to have had a limited impact on the overall market, being more noticeable in smaller municipalities.