Processes of economic development: case of Lithuanian real estate sector

Abstract

The enlargement of the EU has impacted development of housing market in Lithuania as well as in other Central and Eastern countries. The country was significantly influenced by favorable landing and expansion of private sector credit. Hence, Lithuania experienced the period of the financial and asset price boom, which was followed by economic downturn, and consequently, the burst of price bubble. This paper aims to reveal relationships among demand and supply side determinants and housing prices. Hence, the question is being raised if fundamental determinants affect housing prices. The growing dependence of Lithuania on energy resources leads us towards another research question. We will test if housing prices are linked to energy prices. Regression analysis tool, we believe, allows revealing if fundamental determinants are equally important.