Latvia's rental market heated by students ahead of new term

The demand for rental housing has taken an upward turn, with students looking for accommodation ahead of the new study term. Real estate experts surveyed by Latvian Radio on August 4 said that the first apartments to go are in central Rīga in the price category of around €500.

The end of summer is traditionally the hottest period in the rental market when it is fundamentally heated up by both local and foreign students seeking housing for rent.

“Both new students and existing ones either continue to rent or re-rent. It is also noted that students sometimes switch apartments, some combine resources and rent bigger apartments,” Jānis Lipša, chief executive of Rent in Riga, told LR.

However, the student factor isn't the only one contributing to rental-market activity.

“August and September are the months of the year when foreign employees are switching to different companies, as well as international schools where the teaching staff starts teaching in September, as well as different organizations associated with the military,” Lipša continued.

Edgars Dargis, head of the rental division of ARCO Real Estate, said that demand for rental apartments is also increased by athletes who have come to play in Latvian clubs.

“Mostly foreigners who start the season come in September and are already starting to look for housing in August. These are basketball, football club players who are starting the season here. Also, existing players with extended contract are looking for housing. Just like students, resuming the training season,” Dargis said.

Head of Latio's housing trading division, Evija Dzenīte, said that unlike other years, this summer demand for rental apartments has been rising and is boosted not only by students but also by a rate hike set by the European Central Bank. “People are currently choosing to rent for at least some time and look at what will happen next to interbank rates,” Dzenīte explained.

The experts acknowledged that demand in the rental market now exceeds supply, particularly for renovated, modern apartments. This does not mean that the choices have been exhausted altogether.

“We make even small statistics every month and see apartment offer has fallen by about 10-11% in recent months. This means that demand has increased,” Dzenīte said.

Asked whether and how demand increases affect rental housing prices, Dzenīte replied that the emergence of students does not have a special impact on rental prices, because not all owners want to rent their apartments to students.

Dargis also confirmed this:

"Many owners often are skeptical of students because they think they'll party and have problems with paying, but for the most part, medical students are taking over our market – from Germany, Switzerland, Norway or Sweden, they have come here to learn, and the parents are the ones paying. So far, we have not faced solvency problems."

In terms of rental prices, as the heating season starts, the experts have yet to give forecasts as to whether they will fall or not, because, at least for the time being, there is no concern that this winter will bring about as sharp a jump in energy prices as last year, which will force owners to cut the rent price to keep a tenant.

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