Sustainable development of housing in Lithuania

Abstract

Data and calculations are provided in this paper from a study of affordability problems and the demand for dwellings. Lithuania is a country in transition and this is also reflected in the housing market and in housing costs. The mismatch between affordability among the population and the price levels of real estate indicates dysfunctional market mechanisms that are due to the proportional differences between income and dwelling prices. The price level is far too high in Lithuania, compared to the average affordability. The privatization process is partly responsible for the present distorted market. Even though, about 95% of all dwellings in Lithuania are now privately owned, it is relevant to analyze municipal rental dwellings as well as privately owned. The housing situation in Lithuania in many ways is similar to that of other countries in Central and Eastern Europe. Lithuania has quite a large housing stock when compared to these other countries with the same economic level. Mathematical and statistical analysis used from 1990’s show that only short-term forecasts can be done because the mathematical reliability is higher.