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What will happen in Lithuania’s real estate market? Will prices go up or down? Is Vilnius still a hotspot for foreign investors? How is Lithuania’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in Lithuania, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Property prices in Lithuania will drop temporarily due to a short-term economic slowdown
In Lithuania, property prices are temporarily dipping due to a short-term economic downturn.
One reason for this is the rising unemployment rate. By December 2023, unemployment for males hit 7.30%, up from 6.50% the year before. This uptick means fewer people are working, which can slow down economic activity and reduce the demand for homes. When jobs are scarce, people tend to hold off on big purchases like property.
Another factor is the sluggish GDP growth. The Baltic Economic Outlook predicts Lithuania's GDP will grow by just 2.4% in 2024, a slower pace than in past years. A less vigorous economy often means property prices take a hit. Add to that the high inflation rates, which have squeezed consumer wallets, making it tougher for folks to buy homes. The housing market is feeling the pinch from these inflationary pressures and rising interest rates.
Consumer confidence is also on the decline. With the economy slowing and interest rates climbing, people are less sure about buying property. This drop in consumer confidence means fewer buyers are in the market, which can push prices down. When people are worried about the future, they tend to save rather than spend on big-ticket items like houses.
Interest rates are another hurdle. As they rise, mortgages become pricier, making homes less affordable. This increase in mortgage costs means fewer people can buy, leading to a dip in property prices. When borrowing money gets expensive, potential buyers often decide to wait it out.
All these factors combined are creating a temporary lull in the property market. But for those looking to buy, this could be an opportunity. With prices down, it might be a good time to explore the market and find a deal.
Sources: Trading Economics, Luminor, Global Property Guide
2) Property prices in coastal areas like Palanga will drop because of higher flooding risks from climate change
Coastal areas like Palanga are facing increased flooding risks due to climate change.
In recent years, flooding events have become more frequent and severe in Lithuania's coastal regions. This isn't just a passing phase; experts predict that these intense storms and floods will continue, making flooding a growing concern for places like Palanga.
By 2100, the Baltic Sea region, including Palanga, is expected to see a sea level rise of 0.3 to 0.7 meters. This rise will worsen existing flooding risks, pushing the sea further inland and making properties less appealing to buyers who are wary of these threats.
Insurance companies are catching on, and they're not taking any chances. They're raising premiums or denying coverage for properties in high-risk flood zones, including coastal Lithuania. This shift highlights the financial risks tied to climate-related flooding, making property ownership in these areas less attractive.
Government reports are sounding the alarm too, pointing out the need for better flood defenses in Lithuania's coastal infrastructure. While these measures are necessary, they can negatively impact property values in the short term, as they underscore the ongoing risks of climate change.
Sources: MDPI, MDPI, Climate Change Post
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Lithuania versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
3) Rents in Kaunas will drop a little as new housing developments boost supply
In 2023, Kaunas saw a big jump in building permits, leading to a boom in new housing projects.
Developers have been busy, putting up 1,479 apartments for sale, which is a 45% increase from the previous year. This trend is set to continue with 1,500 more apartments expected to be built, marking the highest annual number since 2008. This surge is largely due to investments in industry and modern workplaces, as noted by real estate agencies like Ober-Haus.
With all these new apartments, you can expect a higher vacancy rate in rental properties. More empty apartments usually mean rents start to drop. It's simple supply and demand; more choices for renters often lead to better deals.
On top of that, demographic studies show that Kaunas' population growth isn't keeping up with the housing supply. This mismatch can lead to even more vacancies, putting further pressure on rents to decrease.
For those considering buying property, this could be a good time to look at Kaunas. The influx of new housing might mean more competitive prices and options. Plus, with the city attracting foreign investors, especially in the city center, there's a buzz of potential growth and development.
So, if you're thinking about investing in Kaunas, keep an eye on these trends. The combination of new developments and a stable population might just make it a buyer's market.
Sources: Ober-Haus, Kaunas IN, Ober-Haus
4) Rental yields in rural areas will drop as people move to cities for jobs
In Lithuania, more people are moving to cities for better job opportunities.
Urban areas like Vilnius and Kaunas are buzzing with diverse job options and higher employment rates, making them attractive to job seekers. Younger folks especially love city life for its access to education and healthcare, which adds to the urban migration.
Rural areas in Lithuania have been losing people for years, and this trend isn't slowing down. As cities grow, rural communities struggle to keep their residents. Real estate reports from 2023 show that property prices and rental demand are climbing in urban centers, indicating a shift towards city living.
With more people flocking to cities, rural rental yields are expected to drop. This is because the demand for housing in the countryside is decreasing as urban areas become the go-to for better living conditions and job prospects.
For those considering buying property in Lithuania, it's worth noting that urban properties are in high demand. This trend is driven by the influx of people seeking the benefits of city life, from job opportunities to lifestyle amenities.
As urban centers continue to expand, rural areas face economic challenges due to the population shift. This ongoing migration to cities is reshaping the real estate landscape in Lithuania.
Sources: Trading Economics, ESPON, Sorainen
5) Rental yields in Vilnius will rise as more young professionals seek city living
Rental yields in Vilnius are on the rise as young professionals flock to the city for its vibrant lifestyle and career opportunities.
Vilnius is quickly becoming a magnet for skilled young workers, thanks to its top-notch ICT literacy and the fact that nearly everyone speaks English fluently. This makes it a hot spot for international companies and start-ups looking to set up shop. The city's charm doesn't stop there; it's also a favorite among digital nomads and remote workers, ranking fifth globally for remote work opportunities.
The property market in Vilnius is buzzing, with rental demand climbing due to the influx of young professionals and international students. This surge is reflected in the numbers, with average gross rental yields hitting 5.65% in 2024. The city's reputation as a tech hub is a big draw, attracting talent from all over.
Vilnius's tech scene is booming, with over 5,600 people working in 265 fintech companies, including big names like Revolut. This growth is a magnet for young professionals eager to advance their careers, which in turn fuels the demand for rental properties and pushes yields higher.
For those considering investing in Vilnius, the city's dynamic environment and growing tech industry offer promising prospects. The influx of young talent is not just a trend; it's a driving force behind the increasing rental yields that investors are keen to tap into.
Sources: Global Property Guide, Go Vilnius, Raconteur
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6) Vilnius rents will increase as more international students choose the city
Vilnius is becoming a hotspot for international students, and this is shaking up the local rental market.
From 2021 to 2023, international student enrollment in Lithuania jumped by 20%, with many choosing Vilnius as their study destination. This surge has created a buzz in the city, as students scramble to find places to live.
With university dorms and private halls unable to keep up, students are turning to the city's rental market for flats and rooms. This increased demand is naturally pushing rental prices higher, making it a competitive scene for anyone looking to rent.
Adding to the mix, Vilnius is seeing an influx of people from Ukraine, Belarus, and Russia, which is also driving up the cost of living. In 2022, apartment rents in Vilnius shot up by 26.7%, and the market remains tight with no signs of slowing down.
The shortage of available rental properties is a real issue, as limited housing options are pushing prices even higher. This makes it a challenging environment for both students and locals trying to find affordable housing.
As Vilnius continues to attract more international students, the demand for rental properties is expected to keep rising, making it a dynamic and evolving market to watch.
Sources: International Student Statistics in Lithuania, Lithuania Residential Real Estate Market Analysis, Shortage of Private Student Housing in Poland
7) Rents in Lithuania's coastal areas will stay steady despite changes in tourist seasons
Rents in Lithuania's coastal regions stay stable despite the ups and downs of tourism seasons.
One big reason for this is the steady demand from local residents who need long-term rentals. Unlike tourists, locals aren't swayed by the seasonal changes, which keeps the rental market balanced. The Lithuanian government is also playing a part by promoting year-round tourism. Their plan, the Lithuanian Tourism Roadmap 2030, aims to attract visitors all year, smoothing out the usual tourist season spikes.
In places like Klaipėda, rental yields have stayed stable, with the average gross rental yield at 6.83% in 2024. This shows that even with tourism's seasonal nature, rents don't fluctuate much. The government’s efforts to boost tourism throughout the year help maintain this stability.
Infrastructure development is another factor. The creation of public facilities and green spaces supports permanent residency, making these areas more attractive for long-term living. This is especially appealing to remote workers who are looking for stable rental options. Their need for reliable and comfortable living spaces keeps demand consistent.
Remote work is on the rise, and with it, the need for stable, long-term rentals in coastal regions. This trend is driven by people seeking a good quality of life while working from home. As more people choose to live in these areas, the demand for rentals remains strong.
All these elements together ensure that rental markets in Lithuania's coastal regions remain stable, even when tourism numbers fluctuate. The combination of local demand, government initiatives, and infrastructure development creates a balanced rental environment.
Sources: Global Property Guide, Baltic Times, Urbact
8) Demand for homes with office spaces will grow in Lithuania due to remote work trends
In Lithuania, remote work has surged, with 64% of workers doing their jobs from home by 2023.
This shift is changing how people think about their homes, with many now wanting extra rooms or larger spaces to accommodate home offices. As a result, the home office furniture market is booming, reflecting this new demand for dedicated workspaces.
Surveys reveal that 37% of remote workers in Lithuania have set up a home office, while others make do with makeshift setups in bedrooms or living rooms. This trend is reshaping the real estate market, where listings now often emphasize the presence of a dedicated office space.
For those considering buying property in Lithuania, it's worth noting that homes with office spaces are becoming increasingly desirable. This is not just a passing trend but a response to the growing number of people working from home.
Real estate agents are catching on, often highlighting dedicated office areas as a major selling point in property listings. This is a direct response to the needs of remote workers who prioritize having a separate space for work.
Sources: Exploding Topics, Statista, Statistics Lithuania
We have made this infographic to give you a quick and clear snapshot of the property market in Lithuania. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
9) Interest in sustainable living will grow among Lithuanian consumers, influencing real estate decisions
Lithuanian homebuyers are increasingly drawn to sustainable living options.
One major initiative is the €100 million project by the government and the European Investment Bank, aiming to renovate over 700 apartment buildings for better energy efficiency. This aligns with the EU's goals to cut down on greenhouse gases, showing a clear move towards greener living.
The Multi-Apartment Building Modernisation programme (MABM) is a game-changer, offering subsidised loans for energy-efficient renovations. This has led to a surge in sustainable home systems, as the government pushes for green public procurement and sustainability in housing policies.
Real estate projects with green certifications are popping up more frequently, thanks to government support for sustainable construction. New laws will require at least 50% of public building materials to be wood or organic-based by November 2024, highlighting Lithuania's dedication to eco-friendly building practices.
For those considering a property purchase, this trend means more options for homes that are not only energy-efficient but also align with a sustainable lifestyle. The focus on green certifications and organic materials in construction is a testament to the country's commitment to the environment.
As Lithuania continues to embrace these changes, potential buyers can expect a market that increasingly values sustainability, offering homes that are both modern and environmentally conscious.
Sources: EIB, OECD iLibrary
10) Demand for large multi-family homes will drop as people choose smaller, efficient living spaces
In Lithuania, single-person households are on the rise, leading to a shift in housing preferences.
As more people move to cities, urbanization is growing at 1.7348% annually, and this urban influx is driving a demand for smaller, more efficient living spaces. These compact homes fit well with the urban lifestyle, where convenience and accessibility are key. This isn't just a local trend; globally, people are embracing minimalism and downsizing, which is reshaping housing markets everywhere.
Energy efficiency is becoming a big deal in Lithuania. Since 2021, new buildings must meet the A++ energy performance class, but in 2023, only 22.4% of new apartments in Vilnius hit this mark. This shows a clear need for more energy-efficient homes, which are often smaller and more manageable.
Rising property prices are another factor pushing people towards smaller homes. Large homes are becoming less affordable, making compact living spaces a more attractive option for many. This shift is not just about cost; it's also about a growing awareness of sustainability and efficient living.
In the context of these changes, interest in large, multi-family homes is expected to decline. People are looking for homes that are not only affordable but also align with their values of sustainability and efficiency. This trend is likely to continue as more individuals prioritize these factors in their housing choices.
For those considering buying property in Lithuania, understanding these trends can be crucial. The market is leaning towards smaller, more efficient homes, reflecting broader shifts in lifestyle and environmental consciousness. This could be a great opportunity to invest in properties that meet these evolving demands.
Sources: Ober-Haus, Trading Economics, NAHB
11) Demand for eco-friendly homes in Lithuania will rise as people become more environmentally conscious
Eco-friendly homes are gaining traction in Lithuania, driven by a mix of government initiatives and consumer preferences.
In recent years, the Lithuanian government, alongside the European Investment Bank, has been proactive in promoting sustainable housing. They launched a major initiative to renovate over 700 apartment buildings, focusing on energy efficiency and cutting down greenhouse gas emissions. This project, with a budget of up to €625 million, underscores a strong commitment to eco-friendly housing.
Builders in Lithuania are increasingly opting for sustainable materials, which is another reason for the rise in eco-friendly homes. Materials like Western Red Cedarwood are popular due to their low environmental impact and high energy efficiency. This shift reflects a growing consumer preference for environmentally friendly housing options.
Government incentives have been pivotal in encouraging green building practices. A notable example is the €100 million project funded by the EIB, in collaboration with the Ministry of Finance and the Ministry of Environment. This partnership highlights the government's dedication to sustainable housing.
Stricter environmental regulations for new constructions are also pushing builders towards sustainable practices. These regulations are making eco-friendly homes more appealing and accessible to potential buyers.
As environmental awareness grows, the popularity of eco-friendly homes in Lithuania is expected to rise, driven by both government support and consumer demand.
Sources: EIB Press Release, Constructive Voices, Kedro Namai
This video demonstrates the increasing demand for sustainable housing solutions in Lithuania, reflecting changing consumer preferences.
12) Energy-efficient housing developments will grow in Lithuania as technology improves
Lithuania is making big strides in energy-efficient housing, thanks to new technology and smart planning.
Back in 2023 and 2024, the Lithuanian government teamed up with the European Investment Bank to kick off a €100 million project aimed at renovating over 700 apartment buildings. This initiative was designed to attract up to €625 million for sustainable housing, aligning with the EU’s energy efficiency goals. Such efforts have set a solid groundwork for future projects.
There's also a strong push from the government to boost green finance, with plans to increase green State budget spending to 75% by 2025. This is part of the Green Finance Plan, which aims to make all public procurement green. These financial incentives are key to making energy-efficient housing more attractive to both developers and homeowners.
Homeowners are increasingly interested in cutting energy costs, which is driving up demand for energy-efficient homes. As more people recognize the perks of sustainable living, this trend is likely to keep growing, giving a further boost to the market for such housing.
Technology is a game-changer here. Lithuania's long-term renovation strategy is all about turning existing buildings into energy-efficient, decarbonized structures by 2050. This involves using renewable energy to meet high energy performance standards, making it a cost-effective way to upgrade buildings. Plus, collaborations between tech companies and real estate developers are leading to smart homes that integrate advanced technologies for better energy efficiency.
Sources: European Sting, Finmin Lithuania, Energy EC
13) Virtual reality will transform home viewings in Lithuania, allowing buyers to explore properties remotely
Virtual reality is changing how people buy homes in Lithuania.
In recent years, the real estate sector has embraced VR to offer innovative property tours. This shift is part of a larger trend, with the global VR market in real estate expected to grow significantly. In Lithuania, the AR & VR market has expanded thanks to technological advancements and a strong digital infrastructure. This has made virtual tours more accessible and affordable for both buyers and real estate agencies.
Many Lithuanian real estate agencies now offer virtual tours, which align with the preferences of over 67% of home buyers who want this feature when browsing listings. The enhanced visual quality of devices like the Apple Vision Pro has made these tours more engaging, leading to listings with virtual tours receiving 87% more views. Buyers are spending more time exploring these virtual listings, finding them a convenient way to view properties.
The COVID-19 pandemic accelerated the adoption of remote viewing technologies, making virtual property viewings a safer and more efficient option. This shift has been supported by Lithuania's robust digital infrastructure, which provides a solid foundation for these technologies. As a result, virtual reality is becoming a standard tool in the Lithuanian real estate market, offering a new way for buyers to explore homes remotely.
With VR, potential buyers can explore properties from the comfort of their own homes, saving time and effort. This technology allows them to get a feel for the space and layout of a property without having to visit in person. As more agencies adopt VR, the property viewing process is becoming more streamlined, making it easier for buyers to find their dream home.
Virtual reality is not just a trend; it's a game-changer for the real estate industry in Lithuania. As technology continues to improve, we can expect even more immersive and realistic virtual tours. This will further enhance the home-buying experience, making it more convenient and efficient for everyone involved.
Sources: Statista, Proprli, LandVault, PhotoUp
14) Property interest in Kaunas will rise as it gains recognition as a tech hub
Kaunas is quickly becoming a hotspot for tech innovation, drawing attention from property investors.
One major reason is the increased investment in tech startups. The Kaunas Startups Acceleration Programme, backed by the Kaunas City Municipality, poured over €343,000 into developing 30 startup ideas between 2015 and 2018. This shows a strong commitment to nurturing tech growth in the city.
Tech companies are also setting up shop in Kaunas, despite some economic hurdles. The office market here is intriguing because of its limited new supply and low leasing activity. This scarcity is expected to boost demand, attracting more tech firms. Plus, government efforts to make Kaunas tech-friendly are paying off. Offering residency permits to property buyers has brought in foreign investors, especially from Latvia and Estonia.
There's a noticeable rise in tech-related job postings too. The European Digital Innovation Hub of Central and Western Lithuania, which includes Kaunas, is pushing for industry digitalization. This means more tech jobs are on the horizon. Local universities, like Kaunas University of Technology, are key players in building a tech talent pool. Their Start-up Space has launched over 70 startups in six years, showing a solid educational base for tech.
Media buzz is also helping Kaunas shine as a tech hub. Dubbed the "Silicon Valley of the Baltics," initiatives like the Santaka Valley are fostering collaboration between research and business. This recognition is bolstering its tech hub status.
Sources: EIT Health, Newsec, ISM Faculty
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.