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Everything you need to know is included in our Lithuania Property Pack
Are you considering buying real estate in Lithuania? Are you questioning whether it's wiser to make a purchase now or hold off until next year?
When it comes to market timing, there are varying opinions. Your Lithuanian acquaintance might suggest that now is a perfect time to invest in property, whereas your spouse, who is originally from Vilnius, might have a different view and recommend waiting for more stability.
At Investropa, when we create articles or update our pack of documents related to the real estate market in Lithuania, we dvocate for a fact-based mindset, rejecting unfounded opinions and baseless rumors.
We have gone through official reports and government website statistics in great detail. As a result, we have created a reliable database filled with valuable information. Here's what we found, which can help you decide whether it's the right time to buy real estate in Lithuania.
Enjoy the article!
How is the property market in Lithuania these days?
Lithuania currently stands out for its remarkable stability
Positive
If you want to invest in real estate, prioritize stability as it attracts sustainable development and investor confidence. It is an information you need as a foreigner who might buy a property in Lithuania.
You probably already know that Lithuania is a very stable country. The last Fragile State Index reported for this country is 37.4, which is an exceptional number.
Lithuania's remarkable stability can be attributed to its robust economic growth driven by a diversified economy and strong integration into the European Union, which has provided a buffer against regional geopolitical tensions. Additionally, its commitment to democratic governance and effective public administration has fostered social cohesion and resilience against external pressures.
Now, let's examine the predictions for the economy.
Lithuania is on track for significant expansion
Positive
Before investing in properties, assess the country's economic strength.
As per the IMF's forecasts, Lithuania is set to conclude 2024 with a growth rate of 2.2%, which affirms the country's positive direction. For 2025, the consensus estimate is 2.5%.
Besides that, the economy will keep growing since Lithuania's economy is expected to increase by 10.5% during the next 5 years, resulting in an average GDP growth rate of 2.1%.
The expected sustainable growth rate in Lithuania indicates a stable and growing economy, which can lead to increased property values and rental demand over time. This makes investing in real estate more attractive, as it suggests potential for good returns and reduced risk.
However, there are other factors to consider beyond GDP growth.
Lithuanian business owners are steadily increasing their trust in the economy
Positive
The GDP growth matters for property market evaluation, but may not fully align with business community sentiments. Thankfully, in Lithuania there is a standardized metric that is regularly published. It's not the case for every country, so we're lucky.
The Business Consumer Index (BCI) is a metric used to gauge the confidence of business leaders in the economic conditions of the present and future. It is calculated through surveys and assessments.
The Statistics Lithuania's data indicates that the Business Confidence Index is currently -5 for Lithuania. It can interpreted as a low score.
If we look at the data, however, we can see some positive signs. It's going up: the BCI score, 12 months ago, was -9.
The minimal level of the Business Confidence Index in Lithuania could affect individuals interested in purchasing property. This situation might result in a sluggish property market, marked by reduced investment and slower growth in property prices. Buyers may find fewer options available and could face challenges in locating motivated sellers or obtaining favorable financing terms.
Lithuania is providing less building permits
Negative
If you're thinking of investing in property in a country, it's worth considering the number of construction permits authorized for development. More building permits being delivered demonstrates a positive outlook and an encouraging investment climate.
Unfortunately, the number of building permits granted is falling in Lithuania.
Over the course of the last year, according to Statistics Lithuania, the number of building permits issued by the Lithuanian municipalities fell by 11.3%, from 9,958 to 8,833 units.
Clearly, this is a negative sign. Let's explore further data.
One last point to consider - a decline in building permits directly affects the availability of properties. In such a situation, it is probable that housing prices will see an increase in Lithuania in 2025.
Lithuanian property market experiences unstoppable and surging growth
Positive
Lithuania's home prices have increased by 74.0% in 5 years according to eurostat.
It means that if you had bought a country house in Vilnius for $550,000 five years ago, then it would now be worth around $957,000.
In recent times, the Lithuanian property market has exhibited an unbroken pattern of accelerated growth. Property values have consistently risen, and market dynamics have intensified, signaling a buoyant and progressive real estate sector.
f you're considering buying a property in Lithuania, it's a positive sign. The market is lively and experiencing growth. However, it may be beneficial to wait for prices to decrease before making your investment in order to secure a better deal.
You can find a more detailed analysis of the real estate prices in our property pack for Lithuania.
Everything you need to know is included in our Lithuania Property Pack
Lithuania's population is growing and getting significantly richer
Positive
When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Lithuania, the average GDP per capita has changed by 11.7% over the last 5 years. It's far beyond the global average. Furthermore, the Lithuanian population is growing (+2% in 5 years).
This means that, if you purchase a modern apartment in Vilnius and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be a rise in rental demand in Lithuanian cities like Vilnius, Kaunas, or Klaipėda in 2025.
Properties promise modest rental yields in Lithuania
Neutral
Rental yield is a common measure in real estate investing.
It lets you know how much money you can make from renting the property.
The website Numbeo indicates that rental properties in Lithuania promise gross rental yields from 2.4% and 5.1%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Lithuania.
It suggests a satisfactory level of income relative to the property's value.
As previously discussed, it's possible that housing prices could rise (because there will be a limited supply of available homes). However, on the other hand, there will be a significant increase in the number of wealthier tenants interested in renting. Consequently, rental yields will probably remain stable in Lithuania in 2025.
Everything you need to know is included in our Lithuania Property Pack
In Lithuania, inflation is anticipated to be minimal
Neutral
Simply put, inflation is the persistent upward movement of prices.
It's when your favorite plate of cepelinai costs 10 euros instead of 8 euros a couple of years ago.
If you're considering investing in a property, high inflation can offer you several advantages:
- Property values have a tendency to increase over time, leading to potential capital appreciation.
- Inflation can result in higher rental rates, thereby increasing the cash flow from the property.
- Inflation reduces the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, effectively preserving the value of the investment.
- Diversifying your portfolio with real estate provides stability during periods of inflation.
- Tax advantages, such as depreciation deductions, can help offset the impact of inflation.
Based on the IMF's outlook, over the next 5 years, Lithuania will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
It means that Lithuania is expected to have near-zero inflation then. Prices won't rise and then your property investment may not appreciate.
Is it a good time to buy real estate in Lithuania then?
Now it's time to draw our conclusions.
2025 is shaping up to be an excellent time to invest in property in Lithuania, thanks to the country's remarkable stability. Lithuania has been recognized for its consistent and reliable economic environment, which is a crucial factor for anyone considering a real estate investment. This stability provides a solid foundation for property values, making it a safer bet for investors who are looking for long-term growth and security in their investments.
Moreover, Lithuania's economy is on a promising trajectory, with an expected growth of 10.5% over the next five years, translating to an average GDP growth rate of 2.1%. This sustainable growth rate is a positive indicator for the property market, as it suggests that the economy will continue to expand, leading to increased property values and rental demand. For investors, this means there is potential for good returns on real estate investments, coupled with reduced risk due to the stable economic environment.
Another factor making 2025 a great time to buy property in Lithuania is the limited issuance of building permits. This restriction on new construction can lead to a tighter supply of available properties, which, when combined with the surging growth of the Lithuanian property market, can drive up property values. Additionally, with a growing and increasingly affluent population, the demand for housing is likely to rise, further supporting property value appreciation and rental demand.
Finally, according to Numbeo, rental properties in Lithuania offer promising gross rental yields ranging from 2.4% to 5.1%. This, coupled with the anticipation of minimal inflation, makes the Lithuanian property market an attractive option for investors seeking stable and potentially lucrative returns. With all these factors in play, 2025 presents a compelling opportunity to invest in Lithuania's real estate market.
We genuinely hope this article has provided you with valuable insights and information.. If you need to know more, you can check our our pack of documents related to the real estate market in Lithuania.
-Will real estate prices go up in Lithuania?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.