Vaitiekūnas: Housing market challenge becomes obstacle to reducing gap between Vilnius and regions

Lithuania's housing market presents a significant challenge in bridging the economic divide between the capital, Vilnius, and its surrounding regions. K. Vaitiekūnas, the acting finance minister, highlighted this issue, noting that a lack of adequate housing deters skilled workers from relocating to areas where businesses are establishing themselves and offering well-paid jobs. "We see such a gap with residential housing in the regions, especially if business comes there, it means good jobs are created and they are paid quite well. But the supply of housing is quite limited – these are old apartment buildings or old houses. This somewhat deters the arriving employees," Vaitiekūnas stated during a broadcast of the project 'Financial Health'.

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We see such a gap with residential housing in the regions, especially if business comes there, it means good jobs are created and they are paid quite well. But the supply of housing is quite limited – these are old apartment buildings or old houses. This somewhat deters the arriving employees.

To address this, Vaitiekūnas proposed the development of municipal housing in regional municipalities. This initiative, being developed through the national development bank ILTE, aims to provide modern and comfortable living conditions for incoming engineers, highly paid workers, doctors, and teachers. Unlike social housing, this municipal housing would be managed and developed by the municipalities themselves. Funding could be facilitated through ILTE, allowing municipalities to borrow under favorable conditions, potentially through public-private partnerships with long-term repayment plans.

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Currently, through the national development bank ILTE, we are creating a tool through which municipal housing, not social housing, but precisely municipal housing, will begin to appear in the regions, with modern, comfortable conditions for incoming engineers, better-paid workers, doctors, teachers.

Vaitiekūnas described this as the third stage of regional development, following infrastructure and business attraction. He noted that the results of the initial two stages are already visible, with municipal budgets experiencing substantial growth. This expansion is largely attributed to the rapid increase in personal income tax revenue over the past five to seven years, causing municipal budgets to grow "not by percentages, but by multiples." He also pointed to significant investment in regional infrastructure, funded in part by the EU's Recovery and Resilience Facility and the multi-year EU budget, citing examples of modern swimming pools, renovated squares, and upgraded schools that enhance regional attractiveness.

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The current budget structure means that municipal budgets are growing very rapidly, as they depend on collected personal income tax, and incomes in Lithuania have been growing very rapidly over the past 5–7 years. So municipal budgets have grown not by percentages, but by multiples.