Last year, investment into residential real estate in Lithuania returned to the pre-crisis levels of 2007. Economists say, however, that the growth is sustainable and a real estate "bubble" could, in worst case, deflate a little rather than explode as it did in 2008.
© K. Cemnolonskio nuotr.

Investment into residential real estate totalled €423 million in 2015, or 38% more than the year before, according to Statistics Lithuania. Housing prices in Vilnius grew on average 3.6% and edged up between 0.3% and 1.2% in Lithuania's four next biggest cities.

"I don't think that the current situation is comparable to the one in 2008, because the burst of that bubble had been preceded by impressive price increases, 2.5 times since 2005. At the moment, the increases are between 5% and 20%, so there is no bubble. If there were a price drop, it would not be nearly as dramatic," says economist Žygimantas Mauricas of Nordea Bank.

He says that the housing market in Lithuania is healthy and there is enough supply of affordable and mid-range housing to keep the prices down.

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