Experts say that his time, however, the market is in a better shape and even if there are signs of a bubble, it might deflate a little at some point rather than exploding.
Investment in residential real estate grew significantly last year, by 38% according to Statistics Lithuania, despite relatively modest overall economic growth of 1.6% in the country.
"What was particularly surprising was the growing investment in residential real estate, which topped the 2007 level," Mauricas said.
However, he predicted that in 2016 the effects of real estate investments on economic growth will wane.
"Therefore, in order to stimulate growth and keep up with other Central-Eastern European nations - the Polish economy grew 3.6% in 2015, Slovakia's 3.7%, the Czech Republic's 4.2%, Romania's 3.8% - Lithuania will have to look for other economic growth engines," he said.
If it were not for the effects of Russia's embargo on Lithuanian imports, the economy would have grown by 4.2% instead of 1.6%, Mauricas believes.
As for investment in housing, he expects it to remain high, but below last year's levels.
Despite dramatic growth, he said the housing market in Lithuania is in a more healthy shape than in 2008, when the global financial crisis set in. Eight years ago, supply of housing could not keep up with demand, which drove prices up.
"I don't think that the situation now is comparable to the one in 2008, when the bursting of the real estate bubble had been preceded by impressive increases in prices, which had more than doubled from 2005," Mauricas told DELFI. "Right now, the growth has been between 5% and 20%, so there is no bubble. If there were deflation [in prices], it would not be quite so dramatic."
Right now, there is a sufficient supply of affordable and mid-range housing, he said.
"Buyers are much more sophisticated and discriminating [than in 2008] and the market is more active and mature," Mayricas said.
Investment into residential housing construction totalled €423 million last year, according to Statistics Lithuania, up nearly 40% on 2014. Residential construction accounted for 17% of all construction investment last year.
Fall in investment
Experts at the Bank of Lithuania have also noted that investment into housing could subside this year.
"Further growth in construction could be limited by an extensive supply of newly built housing," Lithuania's central bank said in its economic review.
According to the Bank of Lithuania analysts, the boom in 2015 was mainly driven by the growing disposable income of households and favourable borrowing conditions.
"Profuse construction over the last years could have also been induced by the fact that, in 2014, there were still a lot of projects that developers had prepared before 2008, but could not carry through due to the financial crisis. Sensing growing demand, developers could have taken out those projects from the drawer," the bank's analysts say.
Construction will not subside
Meanwhile real estate agency Ober-Haus presents a more optimistic outlook. The company expects that low interest rates and growing disposable income of households to keep stimulating the construction market at least in Lithuania's biggest cities.
However, Ober-Haus market research department head Saulius Vagonis said there are signs of the market overheating. One of them is new inexperienced developers entering the market and taking up complex construction and sales projects.
"Unfortunately, not all developers judge their abilities and the potential of their projects accurately. As a result, one can hear sad stories about sub-standard buildings, unfinished projects and cheated buyers," Vagonis warned.
In Lithuania’s capital Vilnius, developers constructed 3,558 housing units last year, or 27% more than the year before. In all, 44 new apartment blocks were finished in Vilnius.
Many of the new projects were based in lucrative areas in central Vilnius: Naujamiestis, Senamiestis and Užupis.
Apartments prices in Vilnius grew on average 3.6% last year and edged up in other cities: 0.3% in Kaunas, 1.1% in Klaipėda, 1.2 in Šiauliai, 0.4% in Panevėžys.
Rising housing affordability
The latest Swedbank Baltic Housing Affordability Index showed that housing affordability in Vilnius increased in the last quarter of 2015, with rising wages outpacing slowly rising property prices.
However, compared to the other Baltic capitals the time needed to save for a down payment was still far higher in Lithuania’s capital than in neighbouring states.
The average time needed to save for a deposit for the purchase of a property decreased by 3 weeks to 28.5 months in Tallinn. It fell by 1 month and 1 week in Riga to 24.6 months, and decreased by 1 month in Vilnius to 36.8 months in the last quarter of 2015. It is assumed that a household saves 30% of its net wages every month for a down payment.
Swedbank said that the level of residential price growth was the smallest in Vilnius in final quarter of 2015 partly due to high base as prices rose significantly at the end of 2014 before the euro introduction from a spike in demand.
However, the banks said “accelerating wage growth, high affordability, low interest rates, high rent yields and lack of alternative profitable investments should continue to fuel demand for real estate this year as well.”
The modest level of price increases overall in Lithuania combined with an adequate level of housing supply would indicate that the conditions are not there for another housing bubble to develop, but with some signs of overheating still present, 2016 will be a pivotal year in gauging the future direction of Lithuania’s residential housing market.
The first electrical lamp in Lithuania was lit on April 17, 1892 in the morning in Rietavas. Only 13...
Similarly to the Nurnberg Tribunal, the January 13 trial process is more of a political than a legal...
Sociologists are already looking into scenarios, which could decide choices in the second round of the...
The key task of the Lithuanian president is to deal with the main foreign policy questions and...
Lithuanian President Gitanas Nauseda has signed into law a legislative package introducing tougher...
On Sunday morning, there were 811 COVID-19 cases in Lithuania. 10 deaths related to the novel...
Norwegian-owned Lithuanian textile manufacturer Devold says it could producer around 100,000...
Another patient infected with COVID-19 died in Lithuania on Saturday, bringing the country's death...