A surge in property purchases is creating a sense of urgency among buyers in Lithuania, potentially leading to less-informed decisions, according to industry observers. As the perception grows that housing prices are rising and supply is dwindling, some purchasers are feeling pressured to act quickly, potentially overlooking crucial details about developers and contract terms.
“Purchasing booms in the real estate market have a side effect – people start to rush. When we constantly hear in public that housing is becoming more expensive, supply is decreasing and money is losing value, some buyers experience the require to hurry before they can no longer afford to buy,” said Arminas Karalius, a real estate broker at Inreal. “In such situations, decisions are often made more emotionally than with rational assessment – less attention is paid to the developer’s or contractor’s experience and reliability, or even to the terms of the purchase agreements.”
The fast-paced market is leading to situations where properties are being reserved based on visualizations or preliminary project proposals. According to Karalius, the earlier a property is purchased in the development process, the more important the developer’s reliability and guarantee of project completion become.
Deimantė Laumytė, CEO of property development group Omberg Group, noted that prospective buyers have reported discovering, just before signing a preliminary agreement, that the developer hadn’t yet secured a building permit for the project they were already selling.
“This is one of the risks that could materialize today, especially if projects are being carried out by unknown developers or those who cannot demonstrate experience,” Laumytė warned. This highlights the importance of due diligence in a rapidly evolving market.
However, Laumytė clarified that not all smaller or newer developers are inherently risky. “But now, when procedures are so complex and become more complex every year, when land suitable for apartment buildings is becoming increasingly expensive, and when suppliers of metal, glass and concrete are signaling another price increase, developers with less experience and especially insufficiently qualified specialists may face problems they simply don’t know exist,” she stated.
And, according to Laumytė, that translates to potential problems for their buyers. The Lithuanian real estate market, considered one of the most reliable investment options in the country, is facing increased scrutiny as the pace of development accelerates.
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