2012-04-26
Survey: banks postpone the recovery of the real estate market to the end of 2013
The stagnation in the real estate market will last until the end of 2013, whereas housing prices will not change in the nearest years. Such is the opinion of the majority of commercial banks that participated in the survey organised by the Bank of Lithuania.
According to the data of the survey conducted in April 2012, almost two-thirds (63.6%) of bank employees in management positions are certain that it is not worth to expect the recovery in the domestic real estate market until the very end of 2013. The majority (58.3%) of participants of a similar survey conducted six months ago expected that the market will recover already at the end of 2012.
“Bank assessments are more pessimistic, which is determined by the overall negative background created by problems in certain euro area countries and the Lithuania’s real estate market statistics, which do not give grounds for being very optimistic: the housing loan portfolio continues to contract, whereas the number of real estate transactions is far from boom times”, stated Ms. Kristina Grigaitė, Senior Economist of the Financial Stability Division of the Economist Department of the Bank of Lithuania.
Although, compared to the last year’s autumn, the majority of banks view housing market prospects as poorer, this spring the number of those thinking that the stagnation in the real estate market has already ended increased from 8.3 per cent to 18.2 per cent.
According to the latest survey, around 70 per cent of banks are of the opinion the prices will remain stable that this year. Still, price expectations of a number of banks are changing. Over six months, the share of bank representatives stating that housing prices will increase this year declined from 33.3 per cent to 27.2 per cent. A year ago, the growth of prices was expected by as much as 47.2 per cent of banks that participated in the analogous survey. Bank employees projecting an increase in real estate prices stated both this year and last year that it will not exceed 10 per cent.
According to the latest survey, over six months the share of bank representatives expecting a fall in real estate prices also declined from 11.1 per cent to 3.0 per cent. None of commercial bank representatives expected a fall in real estate prices during the survey conducted a year ago.
Staff members in management positions from seven commercial banks and four foreign bank branches participated in the survey of the Bank of Lithuania.