The accommodation market in Lithuania’s big cities is picking up in the run-up to the new academic year. While rents, especially in Vilnius, remain high, analysts say the situation for tenants is better than last year. They have more choice – and even some room to negotiate the price.
Interest rates slow down sales
As September approaches, young people are returning to the big cities to start or continue their studies. Some are staying in university accommodation, while others are looking for places to rent. Real estate experts say the market is more favourable to them than in previous years.
“Usually there is a decrease in supply in the summer. But this year, the opposite is true: supply has increased quite significantly in the summer and there are a lot of unrented properties,” Arnoldas Antanavičius, head of Real Data and real estate market analyst, tells LRT RADIO.
The reason for this, he says, is that after the European Central Bank hiked interest rates, it cooled down real estate sales. As a result, instead of selling, owners are putting their properties on the rental market.
Even developers, according to Antanavičius, are releasing their properties for rent, waiting for better times to sell.
“Some of the sellers have decided [...] to rent out for a year or two, to see what happens,” he says. “There is an expectation that the ECB will adjust its policy, maybe cut interest rates and the market will start to recover again.”
According to Mindaugas Statulevičius, president of the Lithuanian Real Estate Development Association, the supply of properties to rent is also augmented by co-living projects and big companies entering the market traditionally dominated by individual landlords.
“There are more business offers on the rental market, which we did not have two or three years ago,” he tells LRT RADIO. “In Vilnius, the supply of such properties is already in the hundreds, if not thousands.”
Marius Čiulada, head of the Old Town office of Ober Haus, adds that the situation in major cities is also changing due to the decreasing number of students enrolling in universities.
“The effects of student rent are weakening, [...] we see this in all Lithuanian cities. In Šiauliai, student rental market has almost disappeared, apparently due to reforms in higher education,” he notes.
Rents remain higher than before 2022
Last year, the rental market was extremely tight. Due to the influx of Ukrainian refugees, accommodation was in short supply, with rents shooting up by around 40 percent. This year, prices are a little lower, but above what they were before the Ukraine war.
“This year we are starting the academic year with prices 20 percent higher than before the war. One-bedroom apartments are still the most popular properties. If they are in a new-build house in Vilnius, they start at around 700-800 euros per month, while if they are close to the city centre, the rent can be 1,000 euros or more. In old buildings, rents start at 500 euros,” according to Čiulada.
In Kaunas, rents are a bit lower, starting with 400-500 euros a month in new construction. “In Klaipėda – prices are respectively lower, only that the Klaipėda rental market is much shallower,” Čiulada tells LRT RADIO.
Still, tenants will have more leverage this year than they had before.
“There is more choice. Landlords may still have big expectations are try to get a higher price, but those tenants who can wait until October will definitely be able to get a better deal and negotiate,” says Antanavičius.
With higher interest rates, tenants are worried that some buy-to-rent landlords will try to pass all the costs to them. According to market analysts, they may not be able to do it.
“Landlords might want to pass on the higher interest rates to tenants, but it is unlikely that they will be able to do so. Seeing the increased supply and competition, and with the heating season approaching, landlords will certainly want to realise the property and earn income, not wait for some dream rental prices,” believes Antanavičius.
According to Statulevičius, president of the Lithuanian Real Estate Development Association, the ECB’s policy has mostly affected the housing sales sector, not the rental sector. However, he adds, property developers are responding to the changes by offering an alternative to people who want to buy a home.
“Leasing is becoming more popular. A person can rent for 2-3 years the apartment they want to buy, [...] and then get a loan, once they accrue the downpayment from the rent. This is a solution that is certainly acceptable to some people, and developers, most of them in Vilnius, offer such options,” says Statulevičius.
According to the data of the Centre of Registers, more than 12,000 new housing lease contracts have been registered this year. This is about one third more than in the same period last year.
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