Bank of Lithuania
2015-05-26
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The expectations of commercial banks about real estate prices have changed essentially over a year — there have remained almost no banks projecting housing price increases, while last spring such banks represented more than a half. 

“Last spring the euro adoption-related real estate price increases did not live up to the expectations; currently price projections are much more moderate. The absolute majority of the surveyed banks project price stability,” says Darius Kulikauskas, Head of the Macroprudential Division of the Financial Stability Department at the Bank of Lithuania.

According to the survey data, over 80 per cent of banks expect that next year real estate prices will remain unchanged. For comparison, a year ago, two-thirds of those surveyed projected price increases, while stable prices were expected by a mere 30 per cent of those surveyed.   

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Banks’ perception of the outlook for the housing market and commercial property market varies. 9 per cent of respondents reported that the prices of old-construction buildings would decrease by no more than a tenth, while 18 per cent of the surveyed banks expected a fall in the prices of new-construction buildings over the next year.  Just one in eleven surveyed banks expected growth in commercial property prices of up to 10 per cent.

The lending survey of commercial banks and foreign bank branches, from October 2014, is conducted four times a year (until October 2014 — every half-year). They are conducted in order to obtain information on non-interest related credit standards as applied by financial institutions, their borrowing costs and market expectations. Seven commercial banks and four foreign bank branches provided answers for the bank survey conducted at the end of March 2015. Detailed results of the Survey are to be published next week.