An impressive boom in Lithuania's property market is like a Black Friday without discounts, observers say. 2019 broke records of real estate sales, but observers warn the boom may be unsustainable.
The Centre of Registers reports that some 135,000 real estate deals – involving apartments, houses and land plots – were concluded in 2019, or seven percent more than the year before.
Developers say purchases and reservations on properties in development were at an all-time high last year. According to the Centre of Registers, the number of deals came close to breaking a record.
“[2019] was the best year over the last 10 years in all categories: apartments, houses, land sales,” Paulius Rudzkis of the Centre of Regiters says. “And it is quite close to the best year in history.”
The most expensive apartment sold last year is on Basanavičiaus Street in central Vilnius which went for 2.25 million euros.
However, the two highest-value deals of 2019 involved stand-alone houses. 15min.lt reports that a buyer payed 9 million euros for a house and land in Kaišiadorys District. The property belonged to Ramūnas Karbauskis, a member of parliament and the leader of the Lithuanian Farmers and Greens Union.
Another house, in Vilnius, went for 3.5 million euros. According to lrytas.lt, the property belonged to Juozas Petraitis, a lawyer-businessman who ran for president in 2002.
For Lithuania, these prices are insanely high, says Žygimantas Mauricas, a chief economist at Luminor bank.
“A villa by Lake Geneva in Switzerland costs 3 or 2 million, you could buy one for a million,” he tells LRT TV. “This gives you a pause, since the average wage in Switzerland is about seven times of what it is in Lithuania.”
Even though incomes grew faster than property prices last year, real estate observers caution that the prices may be too high. The Bank of Lithuania has expressed concern over the number of people buying properties on credit. Some have taken out multiple mortgages and fall behind on payments even as the economy is booming.
This year, the government has expanded the property tax, which now applies to real estate worth over 150,000 euros, and raised taxes for landlords letting multiple properties. This, however, is unlikely to cool down the market, says analyst Arnoldas Antanavičius.
“These conditions will dampen the desire to invest into real estate somewhat, but I don't think they will bring any major change,” he tells LRT TV.
Every fifth deal in Lithuania and every third in Vilnius last year were investments. People were buying to let or refurbish old properties and resell at a profit.
Almost half of such buyers were single women with children, according to the Centre of Registers.
There are 60 people in Lithuania who own more than 10 apartments, according to the Tax Inspectorate. A universal property tax would cool down the market and keep the prices down, market observers say.
