Declining Birth Rates and the Real Estate Market: It Is Becoming Increasingly Difficult for Young People to Purchase Housing

Young people in Lithuania are finding it increasingly difficult to buy housing, according to guests speaking on LRT RADIO. They note that even residents earning average incomes in major cities can often afford only older apartments.

Will Demographic Trends Affect the Real Estate Market?

According to Arvydas Avulis, owner of “Hanner,” birth rates have a greater impact on the real estate (RE) market than it may initially seem. However, he emphasized that more important factors are changes in population size and migration trends.

“This is the reality of life. We cannot change everything, but we can think about how to make things different,” A. Avulis said during the LRT RADIO program.

The businessman pointed out that all of Europe is facing demographic challenges. In his view, European countries are mostly addressing this issue by bringing in people from abroad.

“The question then becomes whom to bring in and how many to allow in – that also depends on politics. We suggest allowing people in selectively so that divisions do not emerge in our country – such as aggressive individuals or cultural conflicts.

We can clearly see Sweden’s experience. It used to be the safest country, and now it has one of the highest crime rates. The same is happening in Germany. I believe Lithuanian politicians will make the right decisions here,” A. Avulis shared.

In the long run, according to A. Avulis, a new housing sales and rental market is likely to emerge – homes will increasingly be purchased with the intention of renting them out. According to the head of “Hanner,” this market phenomenon among private individuals is already visible today.

“Examples from other countries show that housing sales are not as high, yet homes are still being built because they are purchased by funds and companies and later rented out. The housing market is changing somewhat. In the future, some people – especially immigrants – may not own homes at all,” he added.

Arnoldas Antanavičius, Head of Business Development at “Profitus,” who also participated in the program, stated that the changing real estate market situation in Lithuania is not surprising and could have been anticipated over the past decade.

“In all markets where real estate prices rise, birth rate problems begin to emerge. This happens for the same reason – it becomes harder for young people to buy housing.

People want to secure housing first and feel that only then can they think about family and children. I often see that even people earning average incomes in major cities can only dream about newly built homes. They can afford only older apartments, and not necessarily the best ones.

This is a Western-world problem – a challenge, but also a natural process,” A. Antanavičius observed.

Loneliness Epidemic, Regional Living, and Real Estate

A. Avulis disagreed that birth rates and housing purchases are directly related. In his opinion, the issue lies more in changing attitudes toward family life.

“Young people today want to dedicate more time to themselves rather than to family. Raising children is not easy work, and when people see how much time it takes, ego starts to play a role. This is happening not only in Lithuania but throughout Europe, and we will not stop it unless we reach a crisis point,” he reflected.

According to A. Avulis, predicting how the real estate and housing market will change is difficult. The pandemic demonstrated this when people suddenly began searching for homes outside city limits.

“We offer the market what it needs. It is difficult to predict what will be needed in the future. During the pandemic, people moved toward suburban areas, but five years later trends changed again. I do not think we should speculate too much.

One thing is obvious – demographics. If we continue with unclear policies, the number of people arriving from Tajikistan and Uzbekistan will continue to grow, which is not necessarily desirable. Integrating different cultures is very difficult, whether the issue concerns real estate, housing, or tolerance,” said the owner of “Hanner.”

The possibility of “ghost towns” emerging in Lithuania is also considered realistic. A. Avulis added that this phenomenon is already visible in other Western countries.

“We see this in America – factories in small towns shut down and thousands of people lose their jobs. They then move to other cities in search of income.

Another scenario is the Italian one. People move from smaller towns to larger cities. In Italy, entire villages have been left empty – and the same will happen in Lithuania,” said A. Avulis.

The Head of Business Development at “Profitus,” however, believes the opposite – regions are demonstrating resilience, and he does not think they will eventually become deserted.

“Living in a smaller town has its advantages: shorter distances, more nature, and public services are often more accessible. Medical specialists are being encouraged to move to regional areas. I also see people taking advantage of remote work opportunities.

Smaller villages may partially empty out, but larger municipalities are definitely building new homes, residents are investing, and businesses are expanding,” A. Antanavičius shared his insights.

Link to the article: https://www.lrt.lt/naujienos/verslas/4/2883128/mazejantis-gimstamumas-ir-nt-rinka-jauniems-zmonems-vis-sunkiau-isigyti-busta