Lithuania

The largest of the three Baltic states, Lithuania is also probably the least well known to British property investors. This is despite the fact that this country of 3.6m people is just as deserving of the title of Baltic Tiger as its two northern neighbours, with the economy growing at an annual 5% during the past few years. Property prices in the capital, Vilnius, a city of around 600,000 people situated in the east of the country, are considerably lower than in Riga and just about equal to those in Tallinn. But they are moving very fast: in some districts of Vilnius, they shot up by more than 30% in 2005 alone. Such rises are being driven in part by a shortage of decent modern housing that is typical of much of the former Communist world. As elsewhere, it is also being fuelled by the growing availability and low cost of finance. Lithuanian banks are happy to lend to foreign investors, too. Tax is levied at a flat 15% on most things including rental income and capital gains, while purchase costs are low.

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