Lithuania’s housing market, which is ending the year 2025 at record levels, is likely to face rising prices in 2026 as reforms to the pension system and looser lending rules boost demand, real estate experts said.
Market analysts said it would be unrealistic to expect stable prices as many people are expected to take out their savings from private pension funds and the central bank loosened responsible lending regulations, leading to increases in buyers’ purchasing power. They also cited geopolitical uncertainty and the risk of an imbalance between housing supply and demand as key challenges.
Tomas Sovijus Kvainickas, head of investment and analysis at real estate development company Inreal, said growing prices could make housing less affordable this year.
“This year [2025] was positive in terms of improving affordability, but as market activity picked up, housing prices began to rise faster,” Kvainickas said. “The same risk we saw in 2022 and early 2024 is emerging again – market activity may slow simply because housing becomes unaffordable.”
He said the current situation differs from 2020 and 2021, when there was significantly more room for prices to rise.
“Affordability has improved to the point where housing became affordable again, but not easily affordable,” Kvainickas said. “If prices start rising rapidly, housing will again become unaffordable, not just harder to afford.”
Raimondas Reginis, head of market research for the Baltics at real estate firm Ober-Haus, said Lithuania’s inflation remains higher than the eurozone average, reducing households’ purchasing power.
“In an environment of rapidly rising residential property prices, buyers are increasingly turning to older housing stock, which is more attractive due to lower prices,” Reginis said.
He added that after a sharp increase in 2025, prices are likely to grow more moderately in 2026.
“In a market with growth potential, it is naive to expect stable prices, but an excessively rapid increase is also unlikely,” Reginis said.
Experts said demand could come under additional pressure this year as some residents withdraw funds from second-pillar pension accounts and as lower down payment requirements take effect.
Kvainickas said the impact would be felt most among buyers seeking second or third homes for investment rather than first-time buyers, who are less likely to have accumulated significant pension savings.
Lithuania’s central bank estimates residents could withdraw about 1.2 billion euros from pension funds in the first half of 2026. Surveys suggest about 20% of those funds could be directed toward real estate investments, although Reginis said a significant share would also go toward renovations, construction and consumer spending.
The supply side, Kvainickas, may not keep up with sustained high demand, which could eventually strain the market.
“Supply is currently sufficient, but the question is how long it can offset declining availability if demand remains high,” he said, noting that reduced supply would further fuel price growth.
About 10,000 housing units are currently under construction in Vilnius, but developers face constraints related to permits, construction capacity and regulatory changes introduced in recent years, he said.
Reginis said geopolitical uncertainty remains the biggest unknown, with potential effects on trade, energy prices, migration and foreign investment. Still, he said recent market data show Lithuanian households remain resilient and continue to invest in housing domestically, despite rising interest in real estate markets in Central and Southern Europe.
He added that a deterioration in the geopolitical situation would pose the greatest risk to housing demand in 2026.
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