Lithuania’s economy is strengthening, while the housing market is picking up pace
Lithuania’s economy is strengthening, while the housing market is picking up pace
March 10, 2026
In 2025, Lithuania’s economy maintained its growth momentum, while the real estate (RE) market showed clear signs of recovery. This is highlighted in the latest Lithuania’s Economic and Real Estate Market Review 2025–2026, prepared by the Inreal Group together with its partners SEB Bank, the law firm COBALT, and the real estate platform CityNow. Analysts note that economic growth was mainly driven by rising consumption, investment, and services exports. In the real estate market, the key factors were lower mortgage interest rates and improving household purchasing power.
Lithuania’s Economic and Real Estate Market Review 2025–2026 (PDF)
The economy is growing, but the war in Iran could alter the positive outlook
In 2025, Lithuania’s gross domestic product (GDP) grew by 2.9% in real terms, with even faster growth of around 3.2% forecast for 2026. Economists note that this year may also benefit from an additional boost to consumption, driven by withdrawals from second-pillar pension funds.
The labour market remains stable: the unemployment rate fell to 6.9% in 2025, while the average gross monthly wage increased by 8.4% year-on-year to €2,410.
“Last year, Lithuania’s economy grew only slightly more slowly than in 2024. Encouragingly, gross value added increased across almost all sectors, with particularly strong growth in investment and services exports. This year, economic expansion is expected to accelerate further, driven not only by a one-off surge in household consumption due to withdrawals from second-pillar pension funds, but also by rising investment. However, the outbreak of war in Iran and the resulting spike in energy prices could revise these economic forecasts,” says SEB economist Tadas Povilauskas.
The housing market has rebounded, with demand rising by more than 80%
In 2025, the housing market experienced a significant increase in activity. In Vilnius alone, over 6,000 new homes were sold or reserved during the year – a rise of 83.6% compared to 2024. The growth in demand was driven by lower mortgage rates, improved financing conditions, and a growing population in major cities. At the same time, the supply of available homes decreased, and the market balance in Vilnius shifted in favor of sellers.
“After a slower period, some buyers who had previously postponed their decision to purchase a home returned to the market. Combined with more favorable borrowing conditions, this has significantly boosted housing demand,” says Tomas Sovijus Kvainickas, Head of Investment and Analysis at the Inreal Group.
Housing prices rose faster than incomes
Housing prices in the largest cities grew at uneven rates. In Vilnius, they increased by around 8%, in Kaunas by about 18.4%, and in Klaipėda by roughly 13.2%. In some cities, price growth outpaced income growth, making housing affordability one of the market’s key challenges.
“If supply doesn’t keep up with demand, housing affordability will deteriorate further, which could bring the market back to a much more moderate level of activity,” notes T. S. Kvainickas.
Most new housing is being built in the ongoing phases of existing development projects
With a slowdown in the issuance of building permits, most new residential projects appeared in the ongoing phases of existing developments, particularly in the well-established Buivydiškės and Bajorai districts, as well as Lazdynai. “It’s also worth noting that in the past six months, the market saw relatively little new supply in the economy segment – new projects were dominated by mid-range and premium housing,” says Vilius Visockas, founder and CEO of CityNow.
There were no major changes in the commercial real estate market
In 2025, the office market in Lithuania was characterised by strong supply growth in Vilnius, more moderate development in Kaunas, and limited activity in Klaipėda, resulting in diverging vacancy dynamics across cities. In Vilnius, the completion of multiple projects significantly expanded modern office stock, pushing Class A vacancy above 10% and shifting negotiating power towards tenants, while rents remained stable but with a gradual increase in the upper price range. Kaunas maintained low vacancy levels despite ongoing development, supporting stable rents and providing a solid basis for further expansion, although future supply may place pressure on older assets. In Klaipėda, limited new supply kept vacancy low and rents stable, though a rise in vacancy is expected as tenants relocate to newer premises. Meanwhile, the warehouse segment remained stable across all major regions, with rental prices largely unchanged and vacancy rates moderately elevated, reflecting a balanced market environment without significant short-term shifts.
Amendments have been introduced to the Construction and Land Use Regulations
Changes are also anticipated in the legal environment, likely to affect real estate development and project implementation. Regulations governing spatial planning, construction and land use supervision have been amended to extend the time limit for investigating complaints regarding potentially illegal construction – in certain cases, it will be extended from 2 to 5 years, and where a violation of the public interest is suspected, complaints may be investigated even for up to 10 years after the completion of construction.
“A longer period within which to respond to potential violations strengthens the prevention of illegal construction and helps to protect the public interest more efficiently. However, at the same time it is important to ensure that this measure is applied responsibly and does not become a source of unjustified legal risk for project developers,” comments Artūras Kojala, Partner at COBALT Lithuania.
About the Review
The Lithuania Economic and Real Estate Market Review 2025–2026 was prepared through collaboration between the Inreal Group, economists, legal experts, and real estate market analysts. It examines the key trends in Lithuania’s economy, housing, and commercial real estate markets.
About the Companies:
INREAL GROUP
INREAL is a brand of an idea, which gives spark to unique projects, basis for professional services, and added value to businesses, clients, and partners. INREAL positions creativity as a core value in the dynamic business world. INREAL Group, which consists of UAB “Inreal”, UAB “Inreal tarpininkavimas”, UAB Inreal GEO”, UAB “Inreal valdymas” and its managed companies, develops unique real estate (RE) projects and provides probably the widest range of real estate services in 12 cities in Lithuania. The company has engaged in business operations for 30 years and implemented more than 70 real estate projects of various purposes, which received recognition and awards at contests not only in Lithuania but on an international scale as well.
SEB BANKAS
SEB is the leading Nordic financial services group. We believe that entrepreneurial people and innovative companies are key to building a better world. We are here to help them achieve their ambitions and contribute to their success in good times and bad. In Sweden and the Baltics, SEB provides their clients financial advice and comprehensive financial services. The SEB Group’s banks in Denmark, Finland, Norway, and Germany focus on corporate and investment banking services for corporate clients and institutions. SEB has branches in 20 countries worldwide. The SEB Group employs around 15 000 people.
COBALT
COBALT is one of the largest law firms in the Baltics. More than 200 lawyers provide comprehensive services to local, regional and international corporations, funds, credit institutions and companies, as well as private individuals in all areas of business law. The firm has won the title of “BestLaw Firm in the Baltic States” seven times. The most prestigious law firm directories “Chambers Global”, “Chambers Europe”, “Legal 500”, “IFLR 1000” and others annually include COBALT in the list of the best law firms in the region.
CITYNOW
CityNow is a tool for tracking new real estate projects. Upcoming and currently developed projects are displayed in the interactive map together with the most important information about the projects. Currently, a database of over 2,500 residential projects is available for projects in the major cities of Lithuania, Latvia, Estonia and Poland.
More Information:
Rūta Merčaitienė, Head of Marketing and Communications, INREAL Group
+370 611 29779 | ruta.mercaitiene@inreal.lt
