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Policy Actions for Affordable Housing in Lithuania

image of Policy Actions for Affordable Housing in Lithuania

Many Lithuanian households struggle to afford good-quality housing. The housing stock is dominated by owner-occupied, multi-apartment buildings that are energy inefficient and face persistent quality gaps. While average household spending on housing is relatively low, house prices have been rising, and many households cannot afford to move to higher quality homes that better suit their needs. Lithuanian policy makers have stepped up support for housing in recent years, but more actions are needed. This report presents the main features of the Lithuanian housing market, highlights housing challenges that have been amplified by the current economic and geopolitical crises, and assesses current policies to address housing affordability and quality gaps. It proposes a series of recommendations to strengthen the supply of and access to affordable housing, and to support Lithuania’s commitment to make housing policy a priority.

English

Executive summary

The cost-of-living crisis and Russia’s war of aggression against Ukraine have created a challenging context for housing policy makers in Lithuania, as strong inflationary pressures are making it harder for households to make ends meet. As in many OECD countries, the effects of the COVID‑19 pandemic on the housing market linger: in late 2022, housing prices in Lithuania remained over 16 percentage points higher than pre‑pandemic prices in late 2019. Rising construction costs, driven by increases in construction materials and labour, are making it harder to build housing at affordable rates. Since the second half of 2021, construction costs for residential buildings have increased dramatically, with a year-on-year increase of 19% in September 2022 – more than double the growth between September 2020 and September 2021. Meanwhile, a declining, ageing population and persistently high levels of regional disparities could lead to a potential shift in future housing demand.

English

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