As housing sales in the capital recover, the balance of supply and demand remains tight, and prices continue to rise, but, according to experts, there are also positive signs: real estate development companies are increasingly focusing on residential real estate development, and more than 20 thousand new housing units are planned. If this scenario comes true, it could mean that housing affordability will start to grow again.
"We see that demand is currently recovering rapidly compared to the past year and a half. Residents are clearly willing and able to buy housing. As interest rates have started to decline, the economy and mid-range real estate segments have recovered. However, we also notice that geopolitical tensions are having less and less of an impact on luxury housing sales: we can probably say that we have gotten used to the state of affairs that caused a shock three years ago and are returning to a more normal rhythm of life.
This is also evidenced by the increasing variety of prestigious real estate projects: developers are increasingly willing to respond to the need of newcomers to purchase luxurious new-build housing, as there has been a particular lack of such supply in the past few years," says Mindaugas Stasiulevičius, head of the Lithuanian Real Estate Developers Association (LNTPA).
According to him, as soon as buyer interest returned, it became obvious that there was a lack of supply in the real estate segment.
"The city of Vilnius's ability to "eat up" housing under construction is certainly greater than the number of completed or developing projects we have today. 450-500 apartments purchased per month is a very normal number, so it is obvious that we need to think about more different projects and their wider geography."
Vilnius remains a steadily growing city, adding 6-10 thousand residents every year, so in order to meet the needs of these people, we must talk not only about central locations. There are few housing and development opportunities in them, obtaining construction permits is difficult and will only become more difficult in the future,” says M. Statulevičius.
The expert emphasizes that these circumstances, together with the increasing cost of construction, are reducing the affordability of housing. The surest way to slow down price growth is to have sufficient housing supply.
Will expand to the south and north
According to the head of the LNTPA, currently in the capital, construction permits have been issued or are being sought for approximately 20 thousand dwellings, so it can be expected that this number will supplement the supply in Vilnius over the next five years.
This is less than the projected housing demand for the same period, based on average monthly sales, but the situation could be resolved by developing new territories and districts in the city. One such territory, where active development is planned, is Gulbinai.
According to the Vilnius City Master Plan approved in 2021, the Gulbinai district, which is still little known to most Vilnius residents, is expected to emerge in the northern part of the capital, with a population of up to 20. The municipal plan also envisages that this area will become one of the six peripheral city centres.
"It is planned that Didieji and Mažieji Gulbinai will become a full-fledged district, bordered on one side by the Molėtai highway, and on the other by the Riešė River, Gulbinas, Balsys, Alsa and Sausa lakes, located in the Verkiai Regional Park."
"Perhaps the greatest distinctive feature of the district will be its greenery: the surrounding lakes, river, and forests of the regional park make this area very attractive to those looking for a life surrounded by nature; in this aspect, it is more promising than neighboring Riešė," says Tomas Brazinskas, director of the real estate development company Regroup.
According to him, it is planned that the future district will occupy a territory of 525 hectares, of which more than half - about 320 hectares - should be urbanized, while the remaining territory of Gulbinai will remain a recreational zone.
The most important challenge that still hinders the development of the district remains the coordination of development plans with institutions.
"Swedbank"According to senior economist Greta Ilekytė, such additional housing supply will help increase housing affordability."
"In Vilnius and in Vilnius district Demographic trends in recent years remain extremely positive. The population has been growing here for 7 years in a row – mainly due to external immigration, but also due to migration within the country. The country's plans also include a larger number of deployed German soldiers, who will arrive with their families in the coming years, mainly to Vilnius.
"So, a growing population means a greater demand for housing. So the construction of such a quarter is good news for buyers, as a higher housing supply should suppress price growth in the future. Moreover, a higher supply means wider opportunities for residents to choose housing that best meets their needs and capabilities," says the economist.
Significant expansion to the south is also planned: the Launagiai district should emerge here within the next decade.
Forecasts are complicated by the economic and geopolitical situation
According to the head of the LNTPA, the situation so far looks positive: real estate development companies are paying more and more attention to residential real estate projects, and market companies that previously prioritized commercial real estate development are also reorienting themselves towards this area. However, predicting the situation in a year or two is difficult today.
"It is very difficult to predict due to all the geopolitical and economic components: it is currently difficult to assess the possible consequences of tariffs, as well as the future situation in the raw materials, construction, and real estate markets, especially considering that the construction of polygons alone will receive at least 2 billion euros in public sector investments in the next couple of years."
We also cannot be sure whether rising prices will not once again stimulate inflation, or whether the financing freeze policy will not be activated again in order to regulate it. This would significantly distort the currently recovering market. There are still many unknowns that today only allow us to speculate on what the price, demand and supply situation could look like in the future,” says M. Statulevičius.
