Julius Dovidonis, CEO of Real Estate Company Realco: Pandemic is not Deterring People from Buying New Homes

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While COVID-19 has left a mark on the country’s housing market, it was not as lasting as was expected in the early stages of the pandemic. After a period of slowed activity during spring months, housing demand has picked up in autumn. Interestingly, for more than one quarter (26%) of potential buyers, the pandemic and the changes it has brought upon society were the main motivating factors that encouraged them to consider buying a new home.

Nearly every second resident (49%) reported remote working as the main motivating factor to search for new home. Meanwhile, 42% of the surveyed respondents indicated that their decision was the result of the travel restrictions brought about by the pandemic. Every third respondent (33%) was motivated by the need to maintain a social distance and the desire to live in lower-density areas, and nearly every fifth prospective buyer (21%) reported fearing potential increase in housing prices. The results came from the survey of prospective buyers of new homes in Vilnius conducted in October by Spinter Tyrimai. The survey was commissioned by Realco.

Remote working and travel restrictions have changed people’s needs

According to Julius Dovidonis, CEO of real estate company Realco who commissioned the survey, the shift towards remote working that occurred during the quarantine period in spring created a greater need for privacy. In some cases, this was explained by the demand for properties with more room, and in other cases by the need for homes with separate spaces as it is rather challenging to ensure well-adapted spaces for remote work and online learning for different family members.

The fact that future buyers are looking for larger and newer properties were supported by the survey results. 49% of the surveyed residents were not satisfied with the size of their current homes and were interested in buying larger properties. A similar proportion of the respondents (42%) reported considering a move to a more comfortable and more recently built housing units.

Interestingly, buying a home has become a priority for the Gen Y segment. 42% of Vilnius respondents aged 26 to 35 reported planning to buy a new home. According to Mr. Dovidonis, the pandemic has kept a substantial proportion of these young and usually mobile residents “locked” in their home country and made them settle to an extent, thus it is only natural that they are seriously considering buying a home.

Travel limitations and lost opportunities to vacation abroad have caused a spike in the demand for so-called vacation housing. Nearly one fifth of the residents (17%) began considering buying a second property for vacation needs in Lithuania’s coastal region, resort towns or other remote picturesque locations.

“The pandemic has shaped and highlighted residential needs and people have sufficient financial resources to meet them. Household deposits with the country’s banks have reached an all-time high at more than €16 million. It is only natural that people who have sufficient financial resources available are searching for ways to put their money to work and for this reason they turn to the housing market,” Mr. Dovidonis said sharing his insights.

New apartment sales are not slowing

Vilnius residents who are considering purchasing a new home are not intending to postpone their plans for a long time. The survey has shown that nearly one third of the capital’s residents are planning to move to a new home during the upcoming year which suggests that despite the initial shock, the outbreak has not had a long-term cooling impact on the housing market and the demand for new homes will not slow down or perhaps even soar. The growth in the sales of new apartments observed in recent months also points to the recovery trend in the residential market.

According to the company’s data, a total of 599 new apartments were sold in Vilnius in January this year, whereas in May, after a fuller picture of the coronavirus impact emerged, this figure dropped to just 43. Nonetheless, after a period of what could be called a downturn, the housing sector got through to the other side rather successfully, and in October this year, the sales of new apartments exceeded January’s sales with a total of 630 apartments sold during that period.

“There is no question that we will not improve or even achieve the sales volume of 2019 this year. Last year was a record year in a decade’s perspective with more than 5,500 newly built apartments sold in Vilnius, a 40% increase compared to 2018.

This year, the sales of newly built properties have fallen slightly with a total of 3,700 apartments sold in Vilnius over the period of ten months. However, we predict that the upward trend in demand will continue and this prediction is supported by our actual sales volumes as well as the results from the survey,” Realco’s CEO said.

A survey of a sample of 1,210 residents of Vilnius was conducted on 15–29 October this year by Spinter Tyrimai.

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