2024-07-23 15:18:39
“Taking into account the forecasts of interest rates in the near future, affordability should improve,” said Julita Varanauskienė, deputy chairman of the LB board.
“The current underestimation of housing affordability is temporary, many EU countries are experiencing similar trends,” she emphasized.
According to the LB study, on average you need 6 annual salaries to buy a house in Lithuania, and 7 in Vilnius, and this indicator is still among the better indicators of EU countries. In total, residents of Lithuania spend an average of about 11% on housing. of disposable income – compared to 2011, this indicator reached 18 percent, and in 2020 – 9 percent
According to LB, housing prices increased due to the 2021 suddenly recovered and strengthened demand and supply that did not manage to react in time. Demand was bolstered by the fact that during the pandemic, residents accumulated more savings to protect them from inflation, while wages rose and low interest rates prevailed.
In addition, the war started by Russia in 2022. significantly increased construction costs, further contributing to stagnant supply growth and rising prices.
The study shows that the maximum housing area that can be afforded with a loan for the average resident of the country has decreased to 53 square meters. m. (square meters). However, it is expected that once the growth of house prices stabilizes, interest rates decrease and wages continue to rise rapidly, the opportunities to take out a larger loan will improve – the average resident will be able to purchase an average of 61 sq.m. with a loan at the end of the year. in 2025 at the end – 67 sq. m. area housing.
However, as the deputy chairman of the LB board emphasizes, the housing affordability situation may worsen over time.
“The situation will worsen in the future, we see that in many other countries,” she asserted.
According to LB, housing affordability will be reduced by the rapidly growing population in big cities, the ever-increasing share of housing purchases for investment purposes, excessive state support, and the lack of quality housing due to lagging renovation.
In LB’s assessment, the deterioration of affordability was caused by strong but temporary external shocks, the effects of which are fading.
In order to achieve good housing affordability in the long term, the Bank of Lithuania offers four groups of measures related to the sustainability of housing demand, the flexibility of supply, the expediency of state support and the directionality of housing policy.
2024-07-23 15:18:39