Why are we, Lithuanians, so eager to buy unrealistically expensive living places?

"Lithuanians are recovering from the previous boom in prosperity, when not only prices but also wages jumped up, and they are gradually getting poorer, because the real purchasing power - what the average wage can buy, regardless of its formal increase - is falling. However, the prices of real estate that no one is buying are stuck.

Neither interest rates trying to fly into space nor reduced demand move them down more seriously. For several years now, the persuasions of analysts that you should not buy, but rent and live long and happily have not worked. On the other hand, for Lithuanians real estate continues to be, if not a huge craze, then at least part of the national sport. According to the data of the State Data Agency, if in 2012 4,622 natural persons engaged in transactions with real estate (this activity code covers everything from trading to renting), that is, in 2021 already 18,395 citizens.

Nothing strange, remembering the real estate boom that happened. One part flocked to look for easy money, to invest as if from a cornucopia of various supports and payments during the pandemic, the other try to take care of their old age. "Investment apartment" has never been so popular.

Here we can start looking for answers why a statistical Lithuanian, unlike a statistical German, tends to buy, even if giving up the last bite of bread, stick to one place instead of renting and thus change cities and places of residence during his life, choosing to be as comfortable as possible.

"Verslo žinios" surveyed banks and it turned out that the average loan is currently around 100 thousand euros, a monthly payment is from 600 euros, the monthly salary of the borrower from 1,500 euros "in hand", but usually the loan is taken together with a co-debtor.

As for housing ownership in Lithuania, 72.6 percent have their own houses, 16 percent are those who purchased housing with a loan, 9.4 percent. - rent cheaper or live for free, 2 percent pay the market price. For comparison, in the Netherlands 60.3 percent have a mortgage, only 10.2 percent of residents own their living place.

A large number of residents in Denmark, Sweden, and Germany rent apartments, much less own their own homes.

This is where the fun begins. We sometimes try to promote that it is worth renting and not getting attached to the property, especially when the loan payment is higher than the rent.

However, at the same time, one forgets to mention a nuance that is particularly significant when a person chooses to buy or rent.

This is social security. In many Western countries and Scandinavia, the probability that if you lose your job and can no longer pay rent (in 2023, the average old-age pension in Lithuania is 542 euros - what can you rent in Vilnius for that amount and still live on?) is quite low. For example, the Netherlands has a particularly developed social housing institute and low-income people live successfully in cottages and apartments, perhaps just outside the city center. If a period of unemployment occurs, the rental payment is reduced or disappears at the same time. This is a form of support. At the same time, it affects the other rental market. In Germany, when problems arose due to too high rental prices, the state simply froze them. I am not going to decide whether it is good or bad, but it is recognized that rent and housing are not only commercial, but also social.

Who will answer today - to which old people's home will go a citizen who, believing the analysts' stories, rent a house for the rest of his life, and then be left with a pension of 542 euros? 

Can we ensure the security of this layer? They are desperately trying to buy an "investment apartment" to at least double their pension, because they see no other way to live in Lithuania with dignity. How many analysts during the real estate boom talked about it?

It goes without saying that people, impoverished during the crises that come into their lives every ten years, "had to take care of themselves". I don't blame the pension system written by the lobbyists, where the mutual funds benefit more than the contributors, but this is not the generation that could yet understand how the break goes in transition from socialism to capitalism. It just is this way.

What to do? The answer is to create and improve the social security system so that a person receives the appropriate service for the taxes paid.

At the same time, it would reduce social tension. Without solving these problems, we may go the way of Portugal. According to the BBC, the average rent in Lisbon today for a standard 50 square meter apartment is now around €1,200 and the minimum wage is around €760. People work two jobs just to avoid being thrown out on the street.

Influencer Diego Soro described how ordinary Portuguese people live:

"There are divorced couples who can't move out and live separately because they can't afford it financially, which I think is cruel. Elderly people are forced to choose between paying rent or medicine, so they shorten their lives just to keep a roof over their heads."

Dissatisfied with the situation, residents of Lisbon and surrounding cities have already started to take to the streets - one of the rallies attracted 30,000 people, and the local mayor called this situation "the greatest crisis of this generation".

Although rent prices are enormous, higher than in the richest districts of Berlin, and wages are much lower than in Germany, a quarter of the apartments in the city center are empty. After the pandemic, the market for short-term rentals, which bring higher income than long-term rentals and increase the price of the latter, has been disrupted. Rich people fleeing from Russia after the events in Ukraine pushed the prices even higher. In order to get a "golden" EU visa, you need real estate. Therefore, some of the apartments are empty - rich Russians simply rewrite them to each other in order to comply with the formalities for the Schengen visa and residence permit in the EU.

The Portuguese are already considering that it is time to start regulating the rental market.

Is regulation necessary in Lithuania? I don't think so, but more and more social security would change not only social services, but also the real estate market. So far, the Santaros University Hospital has funds for a rest home in Nida, but there is no money for a quality nursing home.

  And as long as there are quite a lot of decently earning people who worry about the future, there will always be someone to manipulate them."