Analysis of the Housing Market in Lithuania

Abstract

Cointegration and Granger causality tests were used for the statistical analyses of the housing market in Lithuania. The relationship between the cost of housing and afford‐ability on the one hand, and interest rates, GDP and average incomes on the other was not proven to exist using the given statistical methods. The period of increase in the cost of housing in Lithuania over the last five years is exceptional and difficult to explain using fundamental economic factors and their fluctuation trends alone. The cost of housing has made a clear departure from the economic (business) cycle; the economy has grown, however at a much slower rate than rising costs in the housing market. The reasons for this situation are record lows in interest rates, good conditions to gain financing, the liberalisation of financial markets, speculative attitudes in expectation of the introduction of the Euro, and a divide between the supply and demand of housing that is available. It should be noted that the evaluation of the influence of these factors on fluctuations in costs in the housing market is more hypothetical in nature. Santrauka Nekilnojamojo turto rinkos Lietuvoje statistinei analizei buvo naudojami kointegravimo ir Grangerio priežastingumo testai. Taikant esamus statistinius metodus nebuvo įrodyta, kad egzistavo ryšys tarp nekilnojamojo turto kainos ir įperkamumo, viena vertus, ir palūkanų normų, BVP bei vidutinių pajamų, kita vertus. Nekilnojamojo turto kainos Lietuvoje didėjimo per pastaruosius penketą metų laikotarpis yra išskirtinis ir sunkiai paaiškinamas remiantis vien pagrindiniais ekonominiais veiksniais ir jų svyravimų tendencijomis. Nekilnojamojo turto kaina aiškiai nukrypo nuo ekonomikos (verslo) ciklo; ekonomika išaugo, tačiau gerokai lėtesniu tempu nei augančios kainos nekilnojamojo turto rinkoje. Šios situacijos priežastys – rekordiškai mažos palūkanų normos, geros sąlygos gauti fi nansavimą, fi nansų rinkos liberalizavimas, spekuliaciniai požiūriai tikintis įsivesti eurą ir takoskyra tarp esamo nekilnojamojo turto pasiūlos ir paklausos. Pažymėtina, kad šių veiksnių įtakos kainų svyravimo nekilnojamojo turto rinkoje įvertinimas yra labiau hipotetinis.

Evaluation of Commercial Property Market Maturity: A Case of Lithuania

“…Watkins and Merrill (2003) identify four stages in property market evolution and development: inactivity, cautious beginnings, hyper-growth, and seeking equilibrium. Analyzing residential real estate in Lithuania Ivanauskas et al (2008) analyzed a three-stage market development framework characterized by periods of 1992-2002, 2002-2005, and 2005-2006. Bearing this in mind, the evolution of the property market in Lithuania can be characterized by seven stages of its development (Table 2).…”

Sustainable Development and Creation of the Knowledge Economy: The New Theoretical Approach / Darni Plėtra Ir Žinių Ekonomikos Kūrimas: Naujas Teorinis Požiūris

“…-in construction industry and in real estate sector (Zavadskas 2008;Zavadskas et al 2007a;Zavadskas andAntuchevičienė 2006, 2007;Zavadskas and Kaklauskas 2008;Ivanauskas et al 2008;Kaklauskas et al 2009Kaklauskas et al , 2009aMickaitytė et al 2008;Rutkauskas et al 2008;Urbanavičienė et al 2009), -in energy sector (Štreimikienė 2007;Grundey 2008b;Klevas et al 2007Klevas et al , 2009Staniškienė and Šliogerienė 2009), -in the sector of transportation (Burinskiene 2009;Burinskiene et al 2009;Mačiulis et al 2009), -in tourism sector (Grundey 2008a; , as well as in other sectors of economy and social life. Summarizing the propositions, intended for the characteristics of the "power" concept, it is necessary to mention, that this concept may be treated as very useful when reacting to the challenges for the sustainable development, which arise under the contemporary conditions of the globalization and knowledge based society creation.…”

The analysis of the determinants of housing prices

“…Although Ivanauskas et al (2008) did not identify a causal relation between interest rate and housing prices, Leika and Valentinaitė (2007) showed that real interest rate and credit supply were significant determinants of housing prices.…”

“…Still, Ivanauskas et al (2008) argued that neither GDP nor disposable income were causal determinants of housing prices in the period from 1998 to 2014. They explained that the negative results on the possible causality of housing costs and GDP might indicate a housing costs bubble.…”

“…Firstly, different analysis showed controversial results about the impact of interest rate and inflation (IVANAUSKAS et al, 2008;KANAPECKIENĖ, 2009;LEIKA;VALENTINAITĖ, 2007).…”