With rising real estate prices and shrinking supply in Lithuania, young people face increasing challenges in owning property. If the situation remains unchanged, young people will look for alternatives, such as living longer with their parents, looking for micro-apartments, or renting.
According to Eurostat data, almost a third of 25-34-year-olds in Lithuania still live with their parents. On average, they leave home at the age of 24.4.
In the European Union (EU), the earliest age at which young people leave home is just 17.8 in Sweden, followed closely by other Scandinavian countries. Croatian and Slovakian youth live longest with their parents; on average, they leave home at 31.8 and 30.9 years old.
Looking at the EU average, offspring leave their parents' home at 26.2 years on average, while around 30% of all EU citizens aged 25-34 still live with their parents.
Living with parents longer
According to Gustas Germanavičius, founder and CEO of InRento, although Lithuania's rate has not yet reached the EU average (26.2 years), the prevailing real estate situation in the country may have an impact on future developments.
"After the collapse of the Soviet system, parents and grandparents of the current younger generation took the opportunity to buy property on easier terms. This has led to almost 90% of the Lithuanian population living in owned rather than rented housing," says Germanavičius, referring to Statista's data.
Over the past decade, the share of Lithuanians living in their own homes has fallen from 92.2% to 88.6%. An increasing number of people are now looking at renting as an alternative to owning their own home or staying with their parents.
Younger people who are not yet established in the market are either unable to afford a home or are still hesitant about their long-term life plans. So as property sales prices rise, these people are even more reluctant to buy, and the rental market is growing proportionately.
The alternative - living in micro-housing or converted accommodation
As apartment prices rise, renting becomes more expensive. It is estimated that last year’s rent in Vilnius alone could have increased by around 13%. According to Gustas, there is no good news - rent prices will continue to grow.
This situation encourages the younger generation to look for less traditional options for rent. Today, there is a solid demand for micro-apartments or those converted from office/industrial space to residential apartments.
For example, micro-apartments are relatively affordable even for people with lower income. Secondly, the rent per square meter is much higher compared to a larger unit in the same location, so it is more financially advantageous for those who intend to rent out such properties to buy smaller units.
"Although most people are now buying micro-apartments as an investment and renting them out, more and more children of the owners will live in them in the future," says G. Germanavičius.
To add, investors have also been looking for almost a decade at properties closer to the city center that can be converted - for example, in Vilnius' New Town or Old Town.
"There are still premises waiting to be converted in Vilnius. Right now, InRento is financing this type of property on Kauno Street, next to the cultural bar "Kablys"," says G. Germanavičius.
G. Germanavičius also says that it is difficult to predict which alternatives - renting, investing in micro-apartments, converted real estate, or living with parents longer - will become more popular in the future. It will depend on several different factors:
"It will be determined by the ratio of price growth in the housing and rental markets, as well as the potential intervention of the state and banks in financing them. In addition, the rate at which average wages are rising, and living standards are improving will also have an impact. Today, it is clear that the demand for rental accommodation is growing," notes Germanavičius.